India Steel PSUs to Hike Capex 44% Amid Infra Push

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AuthorVihaan Mehta|Published at:
India Steel PSUs to Hike Capex 44% Amid Infra Push
Overview

India's public sector steel companies are set for a significant capital expenditure surge, with total spending projected to reach ₹25,125 crore in FY27, a 44% jump from the previous year. Steel Authority of India Limited (SAIL) and National Mineral Development Corporation (NMDC) are leading this investment drive, collectively boosting their planned outlays by 50%. This expansion is fueled by robust expectations for the domestic steel industry, underpinned by government infrastructure initiatives and anticipated economic recovery.

THE SEAMLESS LINK
This intensified investment cycle is strategically timed to capitalize on India's ambitious infrastructure development plans and a projected rebound in key end-user industries. The steel sector, critical for national development, is projected to see its market size grow at a 9.08% CAGR from 2026 to 2031, with India aiming for 300 million tonnes per annum (mtpa) capacity by 2030-31. While recent market data might show fluctuations, the underlying fundamentals suggest a robust outlook, buoyed by government spending and policy support. Public sector undertakings are set to collectively spend ₹25,125 crore in fiscal year 2026-27, a substantial 43.9% increase over the previous fiscal.

PSU Expansion Drive

Steel Authority of India Limited (SAIL) is spearheading this capex surge, projecting an expenditure of ₹15,000 crore for FY27, a significant rise from FY26's ₹10,000 crore. National Mineral Development Corporation (NMDC) follows suit, planning to escalate its capital expenditure from ₹6,000 crore in FY26 to ₹9,000 crore in FY27. Manganese Ore India Limited (MOIL) also plans a notable increase, allocating ₹800 crore for the upcoming fiscal compared to ₹600 crore currently. These substantial investments are primarily financed through Internal and Extra Budgetary Resources (IEBR), indicating strong financial health and self-reliance among these state-owned entities.

Industry Outlook and Competitive Positioning

The surge in capital expenditure reflects a strategic bet on sustained demand for steel, driven by India's focus on infrastructure development, housing programs like PM-AWAS, and manufacturing sector growth. The National Steel Policy aims to enhance India's steel capacity significantly by 2030-31. This public sector push occurs as private players also ramp up investments; JSW Steel, for instance, plans to invest over ₹2 lakh crore over the next five years to add approximately 25 million tonnes of capacity. This indicates a broader industry-wide expansion, positioning India to maintain its status as a major global steel producer. The sector is also navigating a transition towards greener steel production, aligning with global decarbonization trends.

SAIL, a Maharatna CPSE, operates with a market capitalization of approximately ₹61,813 crore and a P/E ratio around 20.4 as of early February 2026. NMDC, India's largest iron ore producer, commands a market cap of roughly ₹70,669 crore with a P/E ratio of about 10.06. MOIL, the country's leading manganese ore producer, has a market capitalization of around ₹6,620 crore and a P/E ratio of approximately 22.8.

Recent Developments

In recent operational news, SAIL has signed a Memorandum of Understanding with RITES to enhance logistics and operational efficiency through diesel locomotive leasing and maintenance. The company also secured Great Place to Work certification for the February 2026-2027 period, marking its third consecutive recognition. MOIL has adjusted its manganese ore prices, implementing increases of up to 10% for February 2026 deliveries. Meanwhile, NMDC is reportedly exploring Canadian coal reserves to bolster its steel production capabilities, highlighting a strategy to secure raw material supply chains.

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