India Ratings Places Andhra Cements Bank Loan Facilities on Rating Watch

India Ratings Places Andhra Cements Bank Loan Facilities on Rating Watch​

India Ratings and Research (Ind-Ra) has placed the bank loan facilities of Andhra Cements Limited (ACL) on Rating Watch with Developing Implications. The rating assigned is IND BBB/Rating Watch with Developing Implications/IND A3+/Rating Watch with Developing Implications for the Loans and Working Capital Limits availed by the Company.

The rating action pertains to an instrument with an issue size of INR9,869.70 million, and the rating is associated with an outlook/watch status of IND BBB/Rating Watch with Developing Implications/IND A3+/Rating Watch with Developing Implications.

Analysis Highlights​

Ind-Ra utilized a top-down approach under its Parent Subsidiary Linkage Rating Criteria to determine the rating. This approach is based on ACL's strong linkages with its parent company, Sagar Cements Limited (SCL), which holds a 75% stake in ACL.

The rating action was taken following the in-principal approval by the boards of directors of SCL and ACL for the proposed amalgamation of ACL with its parent, SCL. The amalgamation is expected to be completed over the next nine to 12 months, contingent upon statutory, regulatory, and shareholder approvals, including from the jurisdictional National Company Law Tribunal. Upon completion of this amalgamation, ACL will cease to exist as a separate legal entity, and its debt instruments will transfer to SCL.

ACL reported a modest EBITDA of INR72.3 million in 9MFY26. Ind-Ra believes that ACL may continue to require financial support from SCL to meet its committed obligations until the amalgamation is finalized.

Key Financial and Operational Details​

ACL reported revenue of INR2,876 million in 9MFY26, compared to INR2,741 million in FY25. Furthermore, ACL recorded an EBITDA of INR72.3 million in 9MFY26, whereas in FY25, the company reported losses of INR292 million.

For SCL's consolidated performance, the financial indicators for FY25 compared to FY24 are presented below:


Ind-Ra noted that SCL's consolidated EBITDA per tonne recovered to INR493 in 9MFY26 (compared to INR256 in FY25 and INR446 in FY24), driven by improved realisations and operating leverage. However, large capital expenditure commitments over FY26-FY27 are anticipated to keep leverage metrics elevated in the near term.

Liquidity and Capacity​

As of 9MFY26, SCL reported available liquidity of around INR0.8 billion, supported by fund infusions from the promoter. Additionally, SCL has sanctioned-but-undrawn bank lines totaling around INR2.5 billion, offering a buffer for near-term requirements. SCL has scheduled principal and interest repayment obligations amounting to around INR3.8 billion in FY27.

ACL possesses a cement capacity of 2.25 million tonnes, which accounted for approximately 21% of SCL's consolidated capacity as of end-March 2025. Ind-Ra expects this share to increase to around 27% by the end of FY27, following ongoing expansion projects at ACL. SCL's consolidated cement capacity is projected to reach 11.75 million tonnes by FY27 (up from 10.5 million tonnes in FY25).

The rating watch status means that the ratings may be upgraded, affirmed, or downgraded based on the progress of the proposed amalgamation and the clarity regarding SCL's consolidated credit profile.

Rating History Overview​

The rating history for the bank loan facilities is as follows:


For general information, SCL's consolidated cement manufacturing capacity stood at 10.5mnt and clinker capacity at 6.6mnt post the ACL acquisition.

ACL Stock Price Movement​

Today, Andhra Cements Limited shares edged higher, settling at ₹52.03 after gaining 4.98%. The stock traded on a total volume of 6,058 shares during the session.

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