India Ratings Downgrades Shree Renuka Sugars' NCDs and Bank Loans to 'IND A-'
India Ratings has downgraded Shree Renuka Sugars Limited's NCDs and bank loan facilities to 'IND A-' with a Negative Outlook. The downgrade is due to weaker-than-expected performance in FY26 and projected continuation into FY27, with EBITDA falling to INR1.3 billion in FY26. Net external debt rose to INR56.9 billion.
A downgrade in credit ratings can impact the company's borrowing costs, investor confidence, and overall financial flexibility, thus having a significant effect on its operations and future prospects.
The credit ratings assigned to the company's bank facilities and NCDs have been downgraded, reflecting weaker-than-expected financial performance and a negative outlook.
India Ratings and Research (Ind-Ra) has downgraded the credit ratings for Shree Renuka Sugars Limited's (SRSL) non-convertible debentures (NCDs) and long-term bank loan facilities to ‘IND A-’ from ‘IND A’, with a Negative Outlook. The rating for its short-term bank loan facilities has been revised to ‘IND A2+’ from ‘IND A1’.
This downgrade reflects SRSL's weaker-than-expected financial performance in FY26 and the projected continuation into FY27. The company reported an EBITDA of INR1.3 billion in FY26, a significant drop from INR6.4 billion in FY25, attributed to higher input costs, supply chain disruptions, and mark-to-market losses on commodity hedges. An EBITDA loss was also recorded in 1QFY27.
Despite these challenges, the domestic sugar business is expected to be supported by rising sugar prices. The distillery segment's EBITDA increased in FY26, with higher ethanol allocation for 1HFY27 expected to boost revenue. However, policy measures regarding sugar diversion for ethanol will be a key factor to monitor.
SRSL's net external debt increased to INR56.9 billion at FYE26 from INR45.2 billion at FYE25, driven by reduced cash flows and increased working capital. The company's liquidity position is expected to remain adequate in the near term, supported by its ultimate parent, Wilmar International Limited, which continues to provide financial support and corporate guarantees covering a significant portion of SRSL's debt.
Ind-Ra believes SRSL's ability to improve its EBITDA levels and gradually reduce external debt over FY27-FY28 will be critical for improving its credit metrics.
A plain-language summary of a public exchange filing by Shree Renuka Sugars Limited. Read the original for the full detail.