India Ratings & Research (Ind-Ra) has upgraded KSR Footwear’s long-term bank loan rating to 'IND BB+/Stable' from 'IND BB-'. The upgrade follows improved EBITDAR margins and credit metrics driven by successful inventory liquidation. While operational performance shows signs of recovery, the rating agency maintains a cautious outlook due to continued stretched liquidity, characterized by high utilization of fund-based banking limits.
KSR Footwear Credit Rating Upgraded to IND BB+
KSR Footwear has received a credit rating upgrade to IND BB+/Stable for its bank loan facilities. The company, which emerged from the demerger of Khadim India's footwear business, saw its rating climb from IND BB-.
Reader Takeaway: Operational margins improved significantly through inventory cleanup, but high bank limit utilization remains a liquidity pressure point.
What just happened
India Ratings & Research (Ind-Ra) upgraded KSR Footwear’s long-term bank loan facility of INR 32 crore to IND BB+/Stable and assigned the same rating to an additional INR 4 crore facility. The action reflects a turnaround in financial health observed in the latter half of FY26 and the first quarter of FY27.
Why this matters
The upgrade signals a successful pivot in operations. The company managed to liquidate obsolete inventory that had previously burdened its balance sheet. This strategic shift helped drive EBITDAR margins to 6.25% in 1QFY27, up from lower levels in the prior year. Interest coverage also improved to 3.22x during the same quarter, indicating better earnings relative to debt obligations.
The backstory
KSR Footwear was formed in 2023 and officially took over the footwear distribution business of Khadim India Limited in May 2025. The company spent much of its first year cleaning up its inventory backlog, which pushed its net working capital cycle to 119 days in FY26, compared to 188 days in FY25.
Risks to watch
Despite the improved rating, Ind-Ra highlighted that the company's liquidity remains tight. The firm operated at a high average bank limit utilization of 96.38% over the 11 months ending June 2026. Investors should monitor whether the company can maintain its margin expansion without relying heavily on its existing credit lines.
What to track next
The agency expects revenue to remain stable for FY27. Watch for future disclosures on whether the new product portfolio (SKUs) can sustain the momentum generated in 1QFY27 and if the working capital cycle continues to compress.