Indian Sucrose Ltd Bank Facilities Receive Reaffirmed Ratings from Informatics Valuation

Indian Sucrose Ltd Bank Facilities Receive Reaffirmed Ratings from Informatics Valuation​

Indian Sucrose Ltd (ISL) received confirmation that Informatics Valuation and Rating Limited reaffirmed the ratings assigned to the company's bank facilities. The ratings were for both long term and short term facilities.

The reaffirmed ratings cover a total amount of Rupees Two Hundred Crore only. For the long term bank facilities, the assigned rating is IVR BBB-/ with Stable Outlook, while the short term bank facilities hold a rating of IVRA3.

A summary of the rated facilities and amounts is presented below:

The reaffirmation of these credit ratings is attributed to the company's improving scale of operations and healthy profitability. Furthermore, the credit profile is supported by a comfortable capital structure and adequate debt coverage indicators. ISL's operational stability is also bolstered by the promoters' extensive experience in the sugar industry and its long operational track record. The company also benefits from locational advantages due to its proximity to the perennial Beas River, ensuring consistent availability of raw materials.

The article notes that the integrated operations, which include power cogeneration, provide a cushion against the cyclical nature of the sugar industry, thereby strengthening the overall credit profile. In FY25, the company derived 81.05% of its revenues from sugar, 10.60% from molasses and bagasse, and 5.86% from power cogeneration operations, showcasing revenue diversification.

Operational Highlights and Financial Performance​

The total operating income of the company recorded a CAGR of 7.21% over the last three years, ending March 31, 2025. Revenue growth for FY25 stood at 3.23%, reaching Rs. 545.69 crore compared to Rs. 528.62 crore in FY24. This growth was primarily driven by an increase in the average sales realization value of sugar, and by increased electricity sales resulting from the optimal utilization of enhanced cogeneration capacity.

Improvements in profitability were also observed, with the EBITDA margin improving by 38 basis points to 13.42% in FY25, up from 13.04% in FY24, attributed to a decline in raw material consumption cost. Consequently, the PAT margin also improved, reaching 6.85% in FY25 compared to 6.04% in FY24, owing to a decline in interest and finance cost.

The company’s capital structure remained stable. The overall gearing ratio stood at 0.82x as on March 31, 2025, improved from 0.97x as on March 31, 2024. The TOL/TNW ratio was 1.64x as on March 31, 2025, an improvement from 2.95x as on March 31, 2024. Debt protection metrics also appeared satisfactory, with the interest coverage remaining adequate at 2.94x in FY25, up from 2.56x in FY24. The DSCR stood at 1.99x in FY25, compared to 2.00x in FY24, while Total Debt/EBIDTA was 2.90 times in FY25, versus 3.03 times in FY24.

Identified Risks and Weaknesses​

Despite the strengths, the company faces challenges related to working capital intensity due to elevated inventory levels at the end of the sugar season. The business is also exposed to agro-climatic risks, as sugarcane availability depends on rainfall and weather conditions in the catchment area. Profitability remains susceptible to fluctuations in sugar realizations and sugarcane procurement costs. Furthermore, the sector is subject to potential regulatory risks arising from government interventions concerning pricing, exports, and inventory controls.

In terms of liquidity, the company is expected to maintain adequate liquidity, having earned a gross cash accrual of Rs. 53.27 crore in FY25. It has projected sufficient cash accruals between Rs. 52.45 crore and Rs. 59.49 crore for the projected period of FY26 to FY28, against debt repayment obligations of Rs. 11.52 crore to Rs. 4.37 crore. The unencumbered cash and bank balance as of March 31, 2025, was Rs. 138.15 crore.

Stock Price Movement​

On Monday, Indian Sucrose Ltd shares settled at ₹75.00, ticking up 1.63% for the day. The stock traded within a noticeable range throughout the session, touching an intraday low of ₹73.80 while climbing to a high of ₹76.90.

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