Exxaro Tiles Limited — Credit Ratings, 01-01-2025: Credit Rating- Revision

Exxaro Tiles Limited has reported consolidated financials for the second quarter and first half of fiscal 2025. Revenue for the second quarter stands at ₹70 crore, down from ₹83 crore YoY, while the first half revenue is ₹130 crore compared to ₹157 crore in the previous period. This decline is attributed to subdued demand, intense competition, and diminished customer bargaining power.

Net profit after tax is ₹2.28 crore for the full year, down from ₹7.30 crore the previous year, indicating a significant decrease in profitability. The operating margin decreased to 8.20% in Q2 and 4.53% in H1, from 9.33% and 9.95% respectively in the previous year, primarily due to higher operational costs, particularly in raw materials and marketing.

Operational costs have seen a marked increase, with inventory turnover stretching to 417 days owing to high inventory levels. Gearing remains healthy at 0.38 times as of September 30, 2024, but interest coverage is modest at 1.05 times, reflecting pressure on cash flows.

The current outlook remains cautious, with CRISIL downgrading the company's credit ratings to 'CRISIL BBB-/Negative' and 'CRISIL A3', driven by weak liquidity and earnings performance.

Investors may consider a hold position, as the company navigates through these challenges while monitoring any strategic efforts for operational improvement and revenue recovery.