NMDC Steel operating cash flow falls to Rs 162.04 crore

NMDC Steel Limited (NMDC Steel) generated Rs 162.04 crore of net cash from operating activities in the half year ended September 30, 2026, down from Rs 847.40 crore a year earlier, as a Rs 613.47 crore inventory increase and a Rs 190.90 crore fall in trade payables absorbed cash despite Rs 176.67 crore of profit before tax.

Why did NMDC Steel’s operating cash flow decline?

NMDC Steel’s operating cash flow declined because working-capital movements absorbed Rs 726.83 crore in the half year ended September 30, 2026, compared with a Rs 214.67 crore release in the corresponding half of 2025. Cash flow from operating activities after working-capital changes was Rs 175.75 crore, versus Rs 858.72 crore a year earlier, and income-tax payments of Rs 13.71 crore reduced reported operating cash flow to Rs 162.04 crore.

The largest adverse movement was inventories, which consumed Rs 613.47 crore of cash after providing Rs 128.23 crore in the previous year’s half. Trade payables also consumed Rs 190.90 crore, reversing a Rs 349.68 crore cash contribution in the prior period. These two lines together changed by Rs 1,282.28 crore year on year, accounting for much of the reduction despite higher operating profit before working-capital changes.

How did inventory and creditor movements affect NMDC Steel’s cash?

NMDC Steel’s inventory balance rose to Rs 4,510.85 crore at September 30, 2026, from Rs 3,897.38 crore at March 31, 2026, matching the Rs 613.47 crore cash outflow recorded in the cash-flow statement. The filing does not specify whether the build-up was in raw materials, finished goods or work in progress, so it does not establish the operational reason for the increase.

NMDC Steel recorded a Rs 190.90 crore reduction in trade payables in the operating-cash-flow bridge, while dues to creditors other than micro and small enterprises stood at Rs 5,825.49 crore at September 30, 2026, down from Rs 6,001.37 crore at March 31, 2026. Other current financial liabilities fell by Rs 273.90 crore, adding pressure, although other current liabilities increased by Rs 197.48 crore and other current assets released Rs 114.10 crore of cash.

Trade receivables supplied Rs 29.62 crore of cash in the 2026 half, compared with consuming Rs 202.56 crore in the year-earlier period. That improvement did not offset inventory and payable movements. Deposits related to letters of credit and bank guarantees, or LCs and BGs, contributed Rs 22.83 crore to operating cash flow, whereas they had used Rs 32.51 crore in the previous half.

Did NMDC Steel’s profit improve despite lower operating cash flow?

NMDC Steel returned to profit before tax of Rs 176.67 crore for the half year ended September 30, 2026, compared with a loss before tax of Rs 146.51 crore a year earlier. After deferred-tax expense of Rs 65.13 crore, net profit was Rs 111.54 crore, against a net loss of Rs 89.22 crore in the corresponding 2025 half.

Revenue from operations increased to Rs 7,426.21 crore from Rs 6,755.12 crore, while total income rose to Rs 7,497.61 crore from Rs 6,796.25 crore. Cost of materials consumed increased to Rs 5,116.01 crore from Rs 4,059.53 crore. Changes in inventories of finished goods and work in progress were a Rs 260.90 crore reduction in expense in the 2026 half, compared with a Rs 459.08 crore expense in the prior-year half.

Depreciation and amortisation declined to Rs 494.03 crore from Rs 540.46 crore, while finance costs were nearly unchanged at Rs 262.99 crore compared with Rs 262.11 crore. NMDC Steel reports iron and steel products as its sole reportable segment, so the filing provides no segment-level sales or cash-flow split to identify whether a particular product line drove the change.

How did NMDC Steel fund investing and financing cash flows?

NMDC Steel had an investing cash outflow of Rs 133.13 crore in the half year ended September 30, 2026, compared with an inflow of Rs 99.57 crore a year earlier. Spending on tangible and intangible assets and capital work in progress was Rs 127.46 crore, lower than Rs 156.50 crore in the earlier half, while deposits paid towards investing activities totalled Rs 50.67 crore.

NMDC Steel’s financing cash outflow narrowed to Rs 28.29 crore from Rs 930.60 crore in the prior-year half. The company reported Rs 512.33 crore of proceeds from current borrowings, Rs 279.98 crore of repayments of non-current borrowings and Rs 260.37 crore of finance costs paid. These flows, combined with operating and investing movements, produced a Rs 0.62 crore increase in cash and cash equivalents to Rs 9.49 crore.

Total borrowings were Rs 4,836.92 crore at September 30, 2026, down from Rs 5,298.63 crore a year earlier but above Rs 4,601.94 crore at March 31, 2026. NMDC Steel disclosed a sanctioned working-capital limit of Rs 4,100 crore, comprising Rs 2,600 crore fund-based and Rs 1,500 crore non-fund-based limits; utilisation at September 30 was Rs 1,762.63 crore and Rs 666.45 crore respectively.

Conclusion

NMDC Steel’s first-half results show that a return to profitability did not translate proportionately into cash generation. Profit before tax improved by Rs 323.18 crore year on year, and operating profit before working-capital movements rose to Rs 902.58 crore, but the inventory build and lower payables reduced net operating cash flow to Rs 162.04 crore.

The next disclosed funding milestone is the repayment schedule for the rupee term loan, with quarterly instalments running from March 2024 to June 2031. NMDC Steel said the outstanding rupee term loan was Rs 3,065.17 crore at September 30, 2026, with interest at 8.40% per year based on the three-month marginal cost of funds based lending rate, and reported no repayment or interest default at that date.