Nikita Greentech Recycling Limited’s Credit Rating Reaffirmed by Infomerics; Long-Term Outlook Revised to Negative

Nikita Greentech Recycling Limited’s Credit Rating Reaffirmed by Infomerics; Long-Term Outlook Revised to Negative​

Nikita Greentech Recycling Limited (formerly Nikita Papers Limited) has received a re-affirmation of credit ratings from Infomerics Valuation and Rating Ltd. regarding its Bank Loan Facilities. The rating agency, which conducted the review as part of an annual assessment, revised the outlook on the Long-Term Rating to 'Negative' from 'Stable.'

The company’s total rated bank facilities stand at Rs. 160.95 Crore, comprising both long-term and short-term facilities. The rating reaffirmed for Short Term Bank Facilities is IVR A3+. For Long Term Bank Facilities, the rating is IVR BBB/Negative (Rating Reaffirmed).

Key details of the credit ratings are presented below:

Operational Strengths and Challenges Cited by Rating Agency​

Infomerics affirmed the ratings, noting several strengths of Nikita Greentech Recycling Limited. These include having experienced promoters—the company's directors have been operating in the paper industry for over three decades—and maintaining a comfortable capital structure. The equity share capital increased by Rs. 67.55 crore in FY26 following an initial public offering, improving adjusted tangible net worth (TNW) to Rs. 216.57 crore as of March 31, 2026. Adjusted overall gearing improved to 0.89 times as on March 31, 2026, from 1.25 times in the previous year.

Furthermore, the company has undertaken significant capital expenditure (capex) projects intended to aid topline and profit growth. A capex of Rs. 50 crore is dedicated to setting up a captive power plant, expected to be commissioned by October 2026 and leading to annual cost savings of Rs. 12-13 crore. Separately, a project involving the conversion and upgrading of its 35-year-old Unit 1 to introduce value-added Absorbent Paper requires a capex of approximately Rs. 57.54 crore and is scheduled for completion in October 2026.

The agency also noted that the long-term demand outlook for kraft paper remains favorable, driven by sectors such as FMCG, textiles, and automobiles.

However, the company faces several weaknesses that influenced the revised rating and Outlook:

• Profit Decline: The company reported muted topline growth along with a decline in profit in FY26. Total operating income (TOI) stood at Rs. 357 crore in FY26 compared to Rs. 398.33 crore in FY23. EBITDA declined from Rs. 47 crore in FY24 to Rs. 34 crore in FY26, with profit suffering due to increased raw material costs.
• Working Capital and Competition: The company faces a large working capital requirement. Gross current assets (GCAs) were recorded at 336 days as on March 31, 2026, driven by receivables of 122 days. Competition in the kraft paper segment is intense, limiting pricing flexibility for players.
• Raw Material Volatility: Profitability is susceptible to volatility in waste paper prices, which constitute around 65-70% of the cost of sales.

Rating Outlook and Financial Indicators​

The long-term Negative outlook reflects the sharp moderation in profitability during FY26 and the company's inability to meet earlier financial projections, indicating weaker operational performance than anticipated.

In terms of overall financial health indicators (Standalone), while Total Debt stood at Rs. 193.78 crore as on March 31, 2026, Tangible Net Worth (TNW) was reported at Rs. 173.2 crore. The company's Overall Gearing decreased to 1.37 times compared to 2.26 times in FY25.

The rating agency noted that liquidity is expected to remain adequate in the near-to-medium term, supported by sufficient accruals and meeting term debt repayments between FY27 and FY29, following the recent equity capital infusion of Rs. 67.55 crore.

NIKITA Stock Price Movement​

At 1:24 PM, the stock of NIKITA GREENTECH RECYCLING LIMITED holds steady at ₹76.05, reflecting no change in trading value. The equity trades within its intraday range, which spans from ₹68.45 to ₹83.65.