Steel Authority of India eyes 5% FPO in FY27 to raise funds for capex push

Steel Authority of India (SAIL) is looking to raise capital for itself through a fresh share sale as the state-run steelmaker looks to fund its expansion plans. The company has approached the Finance Ministry's Department of Investment and Public Asset Management (DIPAM) for a 5 percent follow-on public offer (FPO) this fiscal, sources said.

"For SAIL, the thinking is slightly different. The company wants to raise money for itself, unlike an Offer for Sale (OFS), where the proceeds go to the Government of India. They are looking at an FPO-type route so that the company receives the funds," a person directly aware of the matter told Moneycontrol.

FPO route different from OFS

The distinction between the two routes is central to why SAIL is said to be pushing for an FPO. In an OFS, the government sells shares it already holds and keeps the proceeds. In an FPO, the company issues fresh equity to the public, and the money raised goes directly into the company's own books rather than to the government.

The government currently holds 65% in SAIL. While an FPO would still bring down its shareholding as the company's equity base expands, it would generate no direct revenue for the exchequer. That marks a departure from most public sector stake sales planned this fiscal, which have largely relied on the OFS route to add to the government's disinvestment collections.

Moneycontrol has reached out to SAIL and the finance ministry for comment; this story will be updated with their response.

SAIL, under the Ministry of Steel, is a Maharatna central public sector enterprise and India's largest state-owned steelmaker, operating five integrated plants — at Bhilai, Bokaro, Rourkela, Durgapur and Burnpur — along with three special steel plants. The Government of India currently holds about 65 percent equity in the company.

Funds for capex push

SAIL has been ramping up capital expenditure in recent years to expand production capacity across its plants. A fresh equity issue would give the company an additional funding avenue for this expansion, without relying solely on internal accruals or debt.

The proposal comes at a time when SAIL's quarterly earnings have shown a sharp improvement even as output slipped. The company posted a more than two-fold jump in consolidated net profit to ₹1,644.05 crore for the June quarter, aided largely by lower expenses.

Crude steel output for the quarter came in at 4.76 MT, against 4.85 MT in the first quarter of FY26, while sales fell to 4.16 MT from 4.55 MT in the year-ago period. SAIL Chairman Ashok Kumar Panda said the domestic steel industry had shown resilience amid global uncertainties, backed by sustained demand in domestic steel consumption.

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