Crisil Ratings stated that the upgrade reflects an improvement in NSL's business risk profile and financial risk profile, driven by stabilisation and ramp-up of its 3.0 million tonne per annum (MTPA) integrated steel plant at Nagarnar (Chhatisgarh).

The company's operating performance has improved significantly during fiscal 2026, supported by higher capacity utilisation, better operating efficiency, and healthy domestic steel demand.

The capacity utilisation rose to 80% in fiscal 2026, from 50% in fiscal 2025, reflecting successful stabilisation of operations and resolution of initial bottlenecks. This, along with a steady rise in realisations, has led to 60% growth in operating income in fiscal 2026.

The operating profit before depreciation, interest and tax (OPBDIT) also stood at around 11% in fiscal 2026, vis-à-vis operating losses in the previous two fiscals, supported by enhancement in product mix, including specialised grades, raw material optimisation and higher scale of operations.

The operating performance is expected to remain healthy over the medium term supported by continued focus on improvement in operating efficiencies and product mix as well as healthy plant utilization levels amidst steady domestic steel demand growth.

The adjusted interest coverage ratio improved to around 3.1 times during fiscal 2026 (negative during fiscal 2025), and is expected to be in the range of 3–4 times in the medium term, aided by steady operating performance, scheduled repayment of long-term debt and the absence of any major capital expenditure (capex) plans.

Liquidity is supported by cash and equivalents of nearly Rs 800 crore as on 31 March 2026, and average fund-based bank limit utilisation of approximately 75% during the 12 months ending 30 April 2026.

The rating continues to factor in the support NSL receives as a Government of India (GoI) entity, through NMDC. Furthermore, Crisil Ratings understands that the Ministry of Steel has mandated NMDC to provide necessary support to NSL till it is divested by the government.

These strengths are partially offset by the moderate debt protection metrics and susceptibility to cyclicality inherent in the steel industry.

NMDC Steel is a government company that is under administrative control of Ministry of Steel. The company owns and operates the state of the art 3.0 MTPA steel plant at Nagarnar, Chhattisgarh.

The company's net profit rose 97.61% to Rs 50.51 crore on an 8.81% increase in revenue to Rs 3661.84 crore in Q1 FY27 as compared with Q1 FY26.