CARE Ratings Reaffirms RCF's Commercial Paper Rating at CARE A1+
CARE Ratings reaffirmed RCF's Commercial Paper rating at CARE A1+ for ₹3,000 crore, citing strong market position, liquidity, and GoI support, despite regulatory and capex challenges.
The reaffirmation of a strong credit rating is crucial for RCF's financial stability and ability to raise debt, particularly given its substantial ₹3,000 crore capex plans over the next two years. It helps maintain investor confidence and access to capital markets.
The reaffirmation of the 'CARE A1+' credit rating for the Commercial Paper, supported by RCF's established market position, strong liquidity, comfortable capital structure, and significant Government of India ownership, reflects stability and a positive outlook despite industry-specific challenges and large debt-funded capex.
CARE Ratings Limited has re-affirmed the credit rating of Rashtriya Chemicals and Fertilizers Limited's (RCF) Commercial Paper (CP) for an amount of ₹3,000 crore at 'CARE A1+'. The press release was dated October 7, 2025, and received by stock exchanges on October 8, 2025. * Key Rating Strengths: * Established position as the fourth-largest urea producer in India with a diverse product portfolio (urea, complex fertilizers, and industrial chemicals). * High operating efficiency at Thal and Trombay plants, maintaining capacity utilization over 90% in recent years. * Improved operating profit margin (PBILDT margin) to 3.16% in FY25 from 2.01% in FY24, and further to 4.68% in Q1FY26, driven by lower fuel costs and price increases in complex fertilizers. * Comfortable capital structure, with overall gearing improving to 0.58x as of March 31, 2025, from 0.72x a year prior. * Strong liquidity, supported by ₹2,154 crore in cash and equivalents as of August 31, 2025, and significant Government of India (GoI) ownership (75% equity stake) providing high financial flexibility. * Key Rating Weaknesses: * Regulated nature of the fertilizer industry, with high reliance on GoI subsidy and potential delays in subsidy receipts affecting liquidity, despite government interventions. * Volatile raw material prices and cyclicality in the industrial chemical business, which contributed approximately 10% of total operating income in FY25. * Large debt-funded capital expenditure (capex) of approximately ₹3,000 crore over the next two years, primarily for a new NPK plant at Thal (₹1,400 crore) and ammonia plant revamp, which could moderate debt coverage indicators. The NPK plant is expected to commence commercial operations from FY28. * Financial Highlights (Consolidated): * Total operating income was ₹16,828.64 crore in FY25 (flat from ₹16,833.32 crore in FY24), and ₹3,370.58 crore in Q1FY26. * Profit Before Interest, Lease Rentals, Depreciation and Taxation (PBILDT) improved to ₹532.20 crore in FY25 from ₹337.87 crore in FY24, and was ₹157.73 crore in Q1FY26. * Profit After Tax (PAT) increased to ₹242.45 crore in FY25 from ₹225.28 crore in FY24, and was ₹54.43 crore in Q1FY26. * Overall gearing improved to 0.58x as on March 31, 2025, from 0.72x on March 31, 2024. * Interest coverage improved to 2.05x in FY25 from 1.78x in FY24, and further to 2.84x in Q1FY26. * ESG Initiatives: RCF is undertaking environmental initiatives such as upgrading Effluent Treatment Plants for Zero Effluent Discharge, setting up Sewage Treatment Plants, and installing solar power generation plants. Socially, it emphasizes occupational health and safety and undertakes CSR activities, spending ₹16.15 crore in FY25. Governance is strong with 75% GoI holding and a robust board structure.
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Rashtriya Chemicals and Fertilizers Limited filed this with the NSE as a statutory disclosure, categorised under credit ratings. It is a primary document, not a recommendation, and the desk marks it medium impact: worth reading, rarely worth acting on by itself.
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