Maithan Alloys: Long-term rating downgraded to 'Crisil AA-/Stable'; Short-term reaffirmed
CRISIL has downgraded Maithan Alloys' long-term bank facilities rating to 'AA-/Stable' from 'AA/Negative', while reaffirming the short-term rating at 'A1+'. The downgrade reflects a subdued business risk profile due to muted top line and profitability pressures. Operating income was limited to ₹1,613 crore in the first nine months of FY26, with an operating margin of 9.5%. RoCE is expected to be sustained at 6-9%.
A downgrade in credit rating, even with a stable outlook, can impact borrowing costs and investor perception, suggesting a medium impact.
The rating downgrade to 'AA-/Stable' from 'AA/Negative' and the commentary on subdued business risk, muted top line, and pressure on profitability indicate a negative sentiment.
Maithan Alloys Limited (MAL) has had its long-term bank facilities rating downgraded by CRISIL from 'CRISIL AA/Negative' to 'CRISIL AA-/Stable'. The short-term rating for bank facilities has been reaffirmed at 'CRISIL A1+'.
The rating action reflects a subdued business risk profile for MAL, primarily due to a consistently muted top line and pressure on profitability. In the first nine months of fiscal 2026, sales volume was over 1.8 lakh metric tons, with moderate realization of around ₹80,000 per ton, resulting in operating income (including other related income) limited to ₹1,613 crore. Power costs, constituting approximately 30% of the total cost of sales, continue to significantly impact profitability, leading to an operating margin of 9.5% in the same period. The company anticipates that without a substantial reduction in power costs, the recovery in the scale of operations will remain lower than expected, and scale and profitability are likely to remain range-bound over the medium term.
For MAL, operating margins have lowered to 7–10% in the two fiscals through 2025, a decrease from over 13–37% in the five fiscals through 2023. This decline is attributed to increased power tariffs, which rose to over ₹6 per unit from around ₹4–5 per unit previously, causing consistent year-on-year production falls. Low sales volume, coupled with a moderation in realizations to around ₹80,000 per ton in fiscals 2024–25 from over ₹1,10,000 per ton in fiscal 2022–23, limited overall revenue to approximately ₹1,700-1,800 crore in fiscals 2024-25. These factors, combined with high investments of ₹3,636 crore as of March 31, 2025, in current and non-current assets, have resulted in a low return on capital employed (RoCE) of 6–9% in fiscals 2024–25, down from 27% in fiscal 2023.
The ratings continue to be supported by the extensive experience of the promoters and a strong financial risk profile. These strengths are partially offset by exposure to volatility in prices of raw materials and finished goods and the cyclical nature of the ferro alloys industry. The company's financial risk profile remains strong, supported by a healthy net worth of ₹3,739 crore as of March 31, 2025, and low external debt. Gearing and total outside liabilities to total net worth (TOL/TNW) ratios increased to 0.2 times and 0.3 times, respectively, on March 31, 2025, from 0.0 times and 0.1 times a year earlier, but these metrics remain comfortable. The group prepaid debt of about ₹280 crore in September 2025. Interest coverage remained robust at 8.5 times as of March 31, 2025.
CRISIL believes Maithan Alloys Limited will continue to benefit from the extensive experience of its promoters and a healthy financial risk profile. The outlook is stable.
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Maithan Alloys Limited filed this with the NSE as a statutory disclosure, categorised under other regulatory filings. 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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