Fertilizers and Chemicals Travancore Limited — Credit Ratings, 24-04-2025: Credit Rating

The Fertilisers and Chemicals Travancore Limited (FACT) has received ratings of 'ACUITE A' (long-term) for ₹100 Cr and 'ACUITE A1' (short-term) for ₹1050 Cr in bank loan facilities, with a stable outlook. These ratings reflect FACT's strong brand presence in South India, supported by government backing, as it holds a 90% stake. The firm’s transition to using RLNG has enhanced production efficiency and sustainability, aligning with modern environmental standards.

However, the company faces challenges due to increased vulnerability to regulatory risks, agro-climatic factors, and high working capital intensity. For FY24, FACT reported an operating income of ₹5054.93 Cr, down from ₹6198.15 Cr in FY23, primarily affecting profitability, which decreased to net profit of ₹146.17 Cr from ₹612.83 Cr. This resulted in a PAT margin drop to 2.89% from 9.89%. Gearing improved to 1.31 times, while liquidity remains robust with a net cash accrual of ₹172.74 Cr against minimal debt obligations.

The strategic focus remains on improving cost management, given ongoing restructuring proposals for debt, which may alter the financial landscape. Potential investors should monitor sales recovery trends and raw material price stabilization. Given the current financial health, a hold insight may be prudent as the company navigates through these uncertainties while capitalizing on expansion opportunities.