Banswara Syntex Limited — Credit Ratings, 09-01-2025: Credit Rating

Banswara Syntex Limited (BSL) reported consolidated financial results reflecting challenges in operational performance due to external market headwinds. For 1HFY25, total net revenue stands at ₹613.6 crore, showing a decline from ₹1,264.2 crore in FY24 and ₹1,498.8 crore in FY23, indicating a continued decrease in business volume.

Despite the drop in revenue, EBITDA margins showed some resilience, albeit at ₹42.9 crore with a margin of 7.0%, compared to ₹102.7 crore (8.1%) in FY24 and ₹198.1 crore (13.2%) in FY23. The lower margins are a consequence of reduced demand, particularly in the export market, along with lower capacity utilization in key segments.

The company’s operational costs have increased, leading to a net loss, and the rising expense profile, primarily driven by ongoing debt-funded capital expenditure (capex), has resulted in net adjusted leverage deteriorating to 5.46x in 1HFY25 from 3.66x in FY24, while interest coverage reduced to 2.46x.

BSL's financial position reflects adequate liquidity, with a cash flow from operations of ₹117.9 crore, primarily supported by a long-term debt structure to finance significant capex aimed at modernization. The outlook for BSL is cautious with ongoing challenges in optimizing operational efficiency and recovering sales.

In light of the current financial indicators, potential investors may consider a hold strategy, awaiting clearer signals of operational recovery and improvements in profitability metrics that could enhance shareholder value in the medium term.