Sukhjit Starch & Chemicals: Long-term rating downgraded to 'Crisil A/Stable', Short-term affirmed 'Crisil A1'
CRISIL has downgraded Sukhjit Starch & Chemicals' long-term rating to 'Crisil A/Stable' from 'Crisil A+/Negative', while reaffirming the short-term rating at 'Crisil A1'. The downgrade reflects a weaker business risk profile, lower-than-expected revenues of ₹1,425 crore in FY26, and reduced operating profitability. Cash accruals were approximately ₹59 crore in FY26.
A downgrade in credit rating can increase borrowing costs and may affect investor confidence, though the rating remains investment grade.
The credit rating has been downgraded, indicating a negative outlook for the company's financial health and risk profile.
CRISIL has revised the credit rating for The Sukhjit Starch and Chemicals Limited (SSCL). The long-term rating for bank facilities and fixed deposits has been downgraded from 'Crisil A+/Negative' to 'Crisil A/Stable'. The short-term rating for bank facilities has been reaffirmed at 'Crisil A1'.
The downgrade is attributed to a weakening business risk profile. SSCL reported lower-than-expected revenues of ₹1,425 crore in fiscal 2026, with projections indicating flat revenues of ₹1,400-1,500 crore in fiscal 2027 due to subdued realisations. Operating profitability declined to an estimated 5.26% in fiscal 2026 from 6.9% in fiscal 2025, impacting cash accruals, which plummeted to approximately ₹59 crore in fiscal 2026.
Going forward, operating profitability is anticipated to stabilize at 6-7% over the medium term, driven by expected stabilized realisations in the first quarter of fiscal 2027. The company's overall performance is likely to remain subdued, falling short of earlier expectations.
The ratings also factor in the moderation in debt protection metrics, with the interest coverage ratio standing at 2.5 times for fiscal 2026, compared to 3.6 times in fiscal 2025. While an expected improvement in profitability is likely to lead to an improvement in the interest coverage ratio to 4-5 times over the medium term, a sustained improvement in these metrics will be a key monitorable.
Strengths supporting the ratings include SSCL's strong market position as a leading manufacturer of starch and its derivatives in the domestic maize processing industry, a diversified and reputed clientele, and a healthy capital structure with gearing below 0.5 times. These are partially offset by susceptibility to volatility in raw material prices and moderate debt protection metrics.
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Sukhjit Starch & Chemicals 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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