Brickwork Ratings has upgraded Indian Acrylics' bank loan facilities from 'D' to 'BWR BB-/Stable'. This move follows the company's successful repayment of its Rs 50 crore term loan and signs of operational recovery. While the upgrade signals improved liquidity, the company continues to face financial headwinds, including negative net worth and persistent losses. Shareholders should watch for sustained EBITDA growth and ongoing debt reduction.
Indian Acrylics Credit Rating Upgraded from Default to BWR BB-Stable
Rating upgraded to BWR BB-/Stable from BWR D for Rs 99 crore facilities.
Rs 50 crore term loan successfully repaid to support the rating improvement.
Reader Takeaway: Successful debt repayment improves liquidity, but negative net worth and intense industry competition persist.
What just happened
Brickwork Ratings has upgraded Indian Acrylics Ltd's credit rating, moving the company out of the 'Default' category. The bank loan facilities, totaling Rs 99 crore, were upgraded to BWR BB-/Stable for long-term debt and BWR A4 for short-term facilities. The upgrade follows the company's compliance with the agency's curing policy after settling its outstanding term loan obligations.
Why this matters
The transition from a 'Default' rating is a significant milestone for stakeholders, suggesting a stabilization of the company's immediate credit profile. It reflects the management's efforts to reduce debt burdens. However, the rating agency has cautioned that the financial position remains under stress, with net losses continuing to weigh on the balance sheet.
Financial Performance Analysis
Despite the rating upgrade, the company's financials indicate ongoing fragility. For FY26, Indian Acrylics reported a negative tangible net worth of Rs 12.98 crore, while net losses stood at Rs 30.86 crore for FY25. Projections for FY26 suggest a continued loss of Rs 24.09 crore. While operating profits are expected to improve, liquidity remains tight with limited cash cushions available for immediate debt servicing.
Risks to watch
The acrylic fibre industry is under pressure due to competition from cheaper polyester substitutes and the threat of low-cost imports. High leverage remains a structural concern; the company's Debt/TNW ratio is currently very high. Furthermore, the projected Debt Service Coverage Ratio (DSCR) for FY27 suggests that repayment capacity will remain a critical monitorable for the near term.
What to track next
The company's ability to hit the targeted Rs 400 crore revenue and Rs 15 crore EBITDA level is vital. Investors should monitor quarterly updates for further improvements in tangible net worth and progress in overall debt reduction.