Mangalam Drugs And Organics Limited — Credit Ratings, 16-01-2025: Credit Rating- Revision

**Mangalam Drugs and Organics Limited Summary:**

Mangalam Drugs and Organics Limited reported consolidated revenue of ₹156 crore during the first half of FY25, driven by an increase in volume and a strategic shift towards alternative raw materials, resulting in improved margins. This represents a marginal decline in comparison to the previous year's revenue, attributed to lower realizations.

The company’s operating margin saw a significant enhancement of 400 bps, reaching approximately 10.87%, indicating effective cost management and operational improvements. Despite a net loss of ₹9.07 crore for FY24, showing a decline from a profit of ₹1.27 crore in FY23, the anticipated cash accruals are projected to exceed ₹20 crore, reaffirming potential recovery in profitability.

Operational costs have faced pressures, particularly in working capital, with gross current assets at around 173 days, reflecting the company’s higher credit period and stretched receivables. This ongoing situation emphasizes the need for continued focus on improving operational efficiencies.

On the balance sheet front, the financial health appears robust with a net worth exceeding ₹100 crore and a gearing ratio below 1. The upgraded credit ratings to Crisil BBB-/Stable and Crisil A3 reflect confidence in the company's enhanced business and financial risk profile.

Overall, given the recovering profitability metrics and manageable debt levels, a hold position could be prudent, keeping an eye on operational capital management and market conditions.