CARE Ratings has reaffirmed the credit ratings of Mafatlal Industries Limited, according to a release dated September 30, 2025. The ratings reaffirmation reflects the company's healthy performance in FY25 and Q1 FY26, supported by a strong order book position.
The long-term bank facilities rating is reaffirmed at CARE BBB+ with a stable outlook, while the short-term bank facilities rating is reaffirmed at CARE A2.
| Facilities/Instruments | Amount (₹ crore) | Rating | Rating Action |
|---|---|---|---|
| Long Term Bank Facilities | 70.30 (Reduced from 79.30) | CARE BBB+; Stable | Reaffirmed |
| Long Term / Short Term Bank Facilities | 210.00 (Enhanced from 176.70) | CARE BBB+; Stable / CARE A2 | Reaffirmed |
| Short Term Bank Facilities | 96.00 (Enhanced from 67.00) | CARE A2 | Reaffirmed |
Rationale and Key Rating Drivers
The rating reaffirmation reflects Mafatlal Industries Limited's (MIL) healthy performance in FY25 and Q1 FY26 and CareEdge Ratings' expectation of sustained performance in the coming quarters aided by a healthy order book position. MIL's operating income grew by approximately 35% year-on-year to ₹2,807 crore in FY25 against ₹2,078 crore in FY24, driven by a rise in revenue share from the consumer durables segment, which grew by 280% year-on-year in FY25 supported by the execution of large government tenders. In Q1 FY26, total operating income (TOI) grew significantly at 174.5% year-on-year and stood at ₹1,240 crore (Q1 FY24: ₹451.83 crore), driven by the concentration of execution of large institutional orders in consumer durables and textile segments. Revenue from textile and related products contributed approximately 43% and approximately 30% to the total revenue in FY25 and Q1 FY26, respectively. MIL's inclination towards marketing and sale of products and services through government tenders and public and private sector institutions, while capitalizing on its long experience in tendering and corporate business, has led to a change in its business model with sizeable revenue share from this segment in FY25. Its profit before interest, lease rentals, depreciation, and taxation (PBILDT) margin continues to remain thin at 2.6% and 3.8% in FY25 and Q1 FY26, respectively, considering sizeable contribution from the outsourcing-led business. In FY25, the company's performance translated into improved adjusted overall gearing (excluding investments in NOCIL Limited) to 0.23x (FY24: 0.45x) and total debt to PBILDT to 0.96x (FY24: 1.50x). CareEdge Ratings expects MIL to sustain its performance in the coming quarters backed by healthy unexecuted orderbook position in hand. However, regulatory risks inherent to government tenders and their impact on the company's operations remain a key monitorable.
The ratings continue to favorably factor in MIL's experienced promoters with a track record of over 12 decades in the textile business. MIL's healthy scale of operations, past performance with the state government, and financial strength also support the ratings. However, ratings are tempered by moderate profitability margins given asset light outsourcing business and receivables risk considering revenue concentration from government tenders.
Rating Sensitivities
Positive factors that could lead to a rating upgrade include a significant improvement in the scale of operations while maintaining an operating margin of approximately 3% on a sustained basis.
Negative factors that could lead to a rating downgrade include a deteriorating operating margin below 1.8% on a sustained basis, a deteriorating overall gearing above 1.5x, a stretch in the company's liquidity profile, and a significantly declining value of MIL's investment in NOCIL Limited.
Analytical Approach: Consolidated
CareEdge Ratings has modified the analytical approach from standalone to consolidation of financial statements of MIL and its subsidiaries while arriving at MIL's ratings given the operational and strategic linkages between them.
Outlook: Stable
The stable outlook reflects CareEdge Ratings' expectations that the company will continue to benefit from the experience of promoters and experience in executing government tenders translating into healthy performance in the near-to-medium term.
MIL reported total operating income of ₹2,807.47 crore in FY25 compared to ₹2,078.64 crore in FY24. The profit after tax (PAT) stood at ₹97.93 crore in FY25 compared to ₹98.75 crore in FY24.
In Q1 FY26, the total operating income was ₹1,240.28 crore and PAT was ₹45.56 crore.
The adjusted overall gearing (excluding investment in NOCIL Limited) stood at 0.23x as on March 31, 2025.
MIL's liquidity is adequate with expected gross cash accruals of ₹90-100 crore per annum in the next 2-3 years. The company held unencumbered shares in NOCIL Limited with a market value of ₹389 crore as of July 11, 2025, enhancing its financial flexibility.
The company has a wide distribution network with 1,000 dealers and 25,000 retailers, making its brands available across India.
The stable outlook reflects CareEdge Ratings' expectations that the company will continue to benefit from the experience of promoters and experience in executing government tenders translating into healthy performance in the near-to-medium term.
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