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N R Agarwal Industries Ltd. Reaffirms Credit Ratings and Increases Credit Facilities
Team Finance Saathi
04/Jan/2025
What's Covered:
- ICRA reaffirms long-term and short-term ratings for N R Agarwal Industries Ltd.
- Credit facilities have been increased from ₹775 Crore to ₹955.64 Crore.
- N R Agarwal Industries is expanding its manufacturing capacity and increasing export sales.
N R Agarwal Industries Ltd (NRAIL), a key player in the paper industry, has announced significant updates regarding its credit ratings and financial outlook for 2025. The company, known for its manufacturing of duplex paper boards and writing & printing papers, has had its ICRA long-term rating reaffirmed at [ICRA] A (Stable) and its short-term rating at [ICRA] A1. The ratings reflect the company’s robust presence in the paper sector, particularly in western India, its established track record of more than 30 years, and its strong distribution network.
Alongside the reaffirmation, there has been a notable increase in the rated amount from ₹775.00 crores to ₹955.64 crores. This enhancement in credit facilities is a crucial step in NRAIL’s ongoing expansion efforts, especially with the recent operationalization of its new plant starting March 2024. This expansion, alongside higher demand from the e-commerce, FMCG, and pharmaceutical sectors, is expected to drive a 20-25% revenue growth in FY2025.
Despite the growth, the company faces certain challenges, such as pressure on operating profit margins (OPM) in H1 FY2025 due to stabilization of the new plant and fluctuating raw material prices like wastepaper and coal. Moreover, there is volatility in forex rates that exposes NRAIL to some foreign exchange risk, though the company’s export business helps hedge against this risk to some extent.
However, NRAIL's management remains confident that economies of scale, once the new plant reaches full capacity, will improve profitability. The company plans further investments, including ₹150 crore in FY2025 towards expanding its manufacturing infrastructure, particularly for duplex paper board. This development, combined with its strong liquidity position, is expected to keep its financial risks under control.
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