Rating Affirmed for ₹200 Cr Facilities

Infomerics Valuation and Rating Limited has reaffirmed the credit ratings for Indian Sucrose Limited's bank facilities totaling ₹200 crore. The long-term facilities, amounting to ₹180.59 crore, retain a BBB- rating with a Stable outlook. Short-term facilities of ₹19.41 crore are confirmed at A3.

Improved FY25 Performance Drives Rating

This reaffirmation follows the company's improved operational performance and profitability in the fiscal year ended March 31, 2025. Key improvements include a significant reduction in the Overall Gearing Ratio from 1.64x in FY24 to 0.87x in FY25, indicating deleveraging. Profit After Tax grew to ₹38.38 crore in FY25 from ₹32.74 crore in FY24, while the EBITDA margin improved to 13.42%. The Interest Coverage Ratio also rose from 2.56x to 2.94x.

Why the Rating Matters

A stable credit rating signifies the company's ability to meet debt obligations, influencing borrowing costs and capital access. For investors, it indicates a reduced risk profile for the company's debt. This reassurance can aid in future fundraising or refinancing at favorable terms.

Company Background and Context

Indian Sucrose, part of the Yadu Corporation group, operates as an integrated sugar manufacturer and power co-generator in Punjab. This positive rating action contrasts with past issues, as CARE Ratings had previously classified Indian Sucrose as 'issuer non-cooperating' due to information gaps. Analyst reports in early 2026 also raised concerns over long-term growth and debt servicing, leading to 'Sell' recommendations for the stock. The company has faced past legal challenges regarding tax matters and municipal boundary extensions.

Implications of the Stable Rating

The Stable outlook suggests Infomerics anticipates continued satisfactory performance, supporting creditworthiness. Reaffirmed ratings can facilitate smoother access to working capital and other credit facilities. It signals positive market perception of the company's capital structure. The integrated model, including power cogeneration, acts as a buffer against industry cyclicality.

Key Risks to Monitor

High working capital intensity, driven by inventory levels, remains a concern. Profitability is susceptible to volatility in sugar prices and sugarcane procurement costs. Regulatory risks from potential government interventions in the sugar sector persist. Agro-climatic risks affecting sugarcane availability and operational volumes, along with the inherent cyclical nature of the sugar industry, are also factors.

Industry Peers

Indian Sucrose operates alongside major players like Bajaj Hindusthan Sugar Ltd, Dalmia Bharat Sugar and Industries Ltd, and Dhampur Sugar Mills Ltd. These peers also navigate industry-specific risks, with their individual credit ratings varying based on financial performance and operational strengths.

Key Financial Metrics

Revenue from operations increased by 3.2% from ₹528.62 crore in FY24 to ₹545.69 crore in FY25. Profit After Tax grew by 17.2% from ₹32.74 crore in FY24 to ₹38.38 crore in FY25. The Interest Coverage Ratio improved from 2.56x in FY24 to 2.94x in FY25. The Overall Gearing Ratio significantly decreased from 1.64x in FY24 to 0.87x in FY25.

Future Monitoring

Infomerics will monitor audited financial results up to FY25 and projected financials for FY2026-FY2028 for rating surveillance. Continued observation of the operating cycle and its impact on liquidity is expected. The company's sensitivity to government policies and market price volatility, along with its ability to sustain improved financial health and manage working capital, will also be key.