Steel Authority of India Credit Rating Upgraded

India Ratings and Research (Ind-Ra) has upgraded SAIL’s issuer and bank facility ratings to IND AA+/Stable.
The rating agency highlighted a reduction in net adjusted debt/EBITDA leverage to 2.97x in FY26 from 3.89x in FY25.

Reader Takeaway: Stronger operational efficiency and deleveraging drive the upgrade, but heavy future debt-funded capex remains a key monitorable.

What just happened

India Ratings and Research has upgraded the credit ratings for Steel Authority of India Ltd (SAIL) across several instruments, including bank loan facilities and public deposits. The company now holds an IND AA+/Stable issuer rating, reflecting improved financial health and operational performance observed throughout FY26 and the first quarter of FY27.

Why this matters

A credit rating upgrade from a premier agency typically signals increased confidence in a company’s ability to manage debt and operational risks. For shareholders, this validation underscores SAIL’s successful efforts to reduce its working capital cycle—which improved to 76 days in FY26 compared to 114 days in FY25—and manage its net debt more effectively during the period.

The backstory

SAIL’s performance in FY26 showed a steady trajectory, with revenue growing 8% to INR 1,108 billion and absolute EBITDA rising 13% to INR 120 billion. The improvement was supported by structural gains in production, such as better coke rates and increased productivity in blast furnaces. These gains allowed the company to lower its debt burden significantly.

Risks to watch

Looking forward, the agency has cautioned investors regarding the company’s ambitious capital expenditure plan. SAIL plans to spend approximately INR 1,000 billion between FY27 and FY31 to boost production capacity to 35 MTPA. Since 55%-65% of this investment is expected to be debt-funded, Ind-Ra anticipates that net adjusted leverage may climb back to the 3.5x-4.0x range during peak spending phases.

What to track next

Investors should closely follow the timeline for the operationalization of the Tasra and Rowghat mines. Additionally, keep an eye on how effectively SAIL manages raw material price volatility, particularly for coking coal, and whether it can maintain its improved operational efficiencies while undertaking this massive capacity expansion.