Dredging Corporation of India Limited has received reaffirmed credit ratings from Care Edge Rating for its bank facilities, maintaining its investment-grade status despite operational challenges. The rating agency has confirmed its assessment of the company's financial position and operational capabilities in the dredging sector.

Credit Rating Details

Care Edge Rating has reaffirmed ratings for the company's bank facilities totaling ₹453.64 crore across multiple categories:

The rating reaffirmation reflects the company's established market position and strong promoter support, while acknowledging ongoing operational and financial challenges.

Financial Performance and Challenges

The company demonstrated revenue growth with total operating income rising to ₹1,142 crore in FY25 from ₹945 crore in FY24, representing a 21% year-on-year increase. This growth continued in H1FY26 with revenue reaching ₹454 crore compared to ₹355 crore in H1FY25, marking a 28% increase.

Despite revenue growth, profitability faced significant pressure due to liquidated damages of ₹118 crore levied for performance shortfalls and foreign exchange losses on unhedged Euro-denominated borrowings. The company reported net losses in both FY25 and H1FY26.

Promoter Support and Order Book Position

The company benefits from strong promoter backing through a consortium of four major port trusts: Visakhapatnam Port Trust, Paradip Port Trust, Jawaharlal Nehru Port Trust, and Deendayal Port Trust. These promoters have provided ₹315 crore in unsecured loans as of March 31, 2025, with an additional ₹165 crore received during FY25 to support operations and new dredger acquisition.

The order book position remains satisfactory at ₹1,422 crore as of September 30, 2025, compared to ₹1,005 crore as of August 14, 2024. This provides revenue visibility for approximately 1.25 years, with the top five orders accounting for 83% of the total order book.

Fleet Modernization and Future Outlook

The company is addressing its aging fleet challenges through a significant modernization initiative. A new Trailing Suction Hopper Dredger with 12,000 cubic meter capacity is under construction at Cochin Shipyard Limited at a cost of €89.39 million. The project is financed through a €49.9 million ECB loan from Deutsche Bank, with the balance funded by promoter contributions and non-convertible debentures.

The new dredger, scheduled for commissioning by October 2026, is expected to enhance operational efficiency, reduce fuel costs, and support both maintenance and capital dredging activities. This modernization effort aims to improve the company's competitive position and revenue profile from FY27 onwards.

Risk Factors and Rating Sensitivities

The rating agency identified several key risk factors including the aging fleet resulting in high maintenance expenses, vulnerability to foreign exchange fluctuations, and increased competition from domestic and international players. The company incurred ₹34 crore in forex losses during H1FY26 on its unhedged Euro loan exposure.

Positive rating factors include maintaining operations above ₹1,000 crore with PBILDT margins over 18% and improving collection days below 200 days. Negative factors encompass increased working capital intensity and overall gearing above 1.5x on a sustained basis.

Dredging Corporation of India (DCI), a key player in the maritime infrastructure sector, has released its financial results for the second quarter, revealing a mixed performance with both growth and challenges.

Revenue Growth Amid Widening Losses

DCI reported a quarterly revenue of ₹2.12 billion, marking a 6% increase from ₹2 billion in the same period last year. This growth indicates a steady demand for the company's dredging services, potentially reflecting increased maritime infrastructure activities.

However, the company's bottom line faced pressure, with a net loss of ₹342 million, slightly higher than the ₹335 million loss reported in the corresponding quarter of the previous year. This widening of losses, despite revenue growth, suggests ongoing challenges in cost management or operational efficiency.

Improved EBITDA Performance

A notable bright spot in DCI's financial results is the significant improvement in its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). The company turned its EBITDA positive at ₹249 million, a substantial improvement from a loss of ₹15.2 million in the previous year. This turnaround resulted in an EBITDA margin of 11.78%, indicating better operational efficiency and cost control at the operational level.

Financial Position and Cash Flow

The unaudited standalone financial results provide additional insights into DCI's financial position:

The company's cash flow statement shows a positive net cash flow from operating activities of ₹17,123.16 lakhs for the period ended September 30, 2025, indicating healthy operational cash generation despite the reported net loss.

Operational Highlights

While specific operational details are limited, the improvement in EBITDA suggests that DCI may have implemented cost-saving measures or improved its project execution efficiency. The company's ability to grow its revenue in a challenging economic environment is also noteworthy.

Looking Ahead

As DCI navigates through these mixed results, investors and stakeholders will likely focus on the company's strategies to maintain revenue growth while addressing the factors contributing to its net losses. The positive EBITDA trend, if sustained, could be a stepping stone towards improved profitability in future quarters.

The management's focus on operational efficiency and cost management will be crucial in translating the revenue growth into bottom-line improvements. Stakeholders may also look for any updates on new project acquisitions or expansion plans that could drive future growth.

Note: All financial figures are based on the unaudited financial results for the quarter ended September 30, 2025, as reported by Dredging Corporation of India Limited.