Machino plastics Limited has announced its unaudited financial results for the quarter ended December 31, 2025, revealing a challenging quarter despite strong revenue performance. The company reported a net loss of ₹147.41 lakhs in Q3FY26, marking a significant reversal from the profit of ₹153.92 lakhs recorded in the corresponding quarter of the previous fiscal year.

Financial Performance Overview

The company's financial performance for Q3FY26 presented a mixed picture, with robust revenue growth offset by operational challenges:

Revenue Composition and Growth

The company's revenue growth was driven primarily by its core business segments. Sale of products increased substantially to ₹12,545.59 lakhs from ₹9,341.86 lakhs in Q3FY25, representing a growth of 34.29%. Other operating revenues contributed ₹35.48 lakhs compared to ₹26.66 lakhs in the previous year.

Expense Analysis

Despite the revenue growth, the company faced significant cost pressures across multiple expense categories. Cost of material consumed rose sharply to ₹7,480.13 lakhs from ₹5,115.89 lakhs, representing a 46.24% increase. Employee benefit expenses increased to ₹2,079.95 lakhs from ₹1,262.76 lakhs, while finance costs rose to ₹515.97 lakhs from ₹313.57 lakhs in Q3FY25.

Nine-Month Performance

For the nine months ended December 31, 2025, Machino Plastics maintained overall profitability despite the challenging third quarter:

Segment Performance

The company operates through two primary business segments. Plastic Injection Moulding Parts generated revenue of ₹9,670.35 lakhs in Q3FY26 compared to ₹8,646.57 lakhs in Q3FY25. The Moulds & Dies segment showed exceptional growth, with revenue increasing to ₹2,910.72 lakhs from ₹721.95 lakhs in the corresponding previous quarter.

Earnings Per Share Impact

The quarterly loss translated to a basic earnings per share of ₹(2.40) for Q3FY26, compared to positive earnings of ₹2.51 per share in Q3FY25. For the nine-month period, basic EPS stood at ₹1.75 versus ₹8.23 in the previous year, reflecting the significant decline in profitability despite revenue growth.

Machino Plastics Limited has received a credit rating downgrade from CRISIL Ratings, with the agency revising its long-term bank loan facilities rating to 'CRISIL BB+/Stable' from 'CRISIL BBB-/Stable' on February 02, 2026. The downgrade affects the company's total bank loan facilities worth Rs 172.3 crore and reflects concerns over declining profitability and capital structure deterioration.

Rating Downgrade Details

The rating action encompasses the company's entire portfolio of long-term fund-based limits, as detailed in the official communication:

Key Factors Behind Downgrade

Declining Operating Profitability

The primary driver for the downgrade is a significant moderation in the company's business risk profile, particularly due to declining operating profitability. Operating margins dropped to 6.91% up to September 2025 from 8.4% in fiscal 2025, primarily attributed to higher overhead expenses amid low-capacity utilization. While CRISIL expects profitability to improve to around 8% for full fiscal 2026, supported by increased capacity utilization and better absorption of fixed costs in H2 FY26, it remains below the agency's earlier expectation of approximately 9%.

Leveraged Capital Structure

The rating action also reflects deterioration in the company's financial risk profile, particularly its capital structure. The Total Outside Liabilities to Tangible Net Worth (TOLTNW) ratio reached approximately 5.30 times as of March 31, 2025, significantly higher than CRISIL's previous expectation of 4.5-4.8 times. This increase stems from the company's increased dependence on external debt to meet capital expenditure requirements for setting up a new unit for MSIL and incremental working capital needs.

Financial Performance Metrics

The company's recent financial performance shows mixed results:

Liquidity and Cash Flow Concerns

CRISIL has assessed the company's liquidity as "stretched" with net cash accruals projected to remain in the range of Rs 20-23 crore in fiscal 2026. The modest cushion between net cash accruals and debt obligations is estimated at 1.0-1.3 times over the medium term. However, debt servicing is supported by headroom in bank limits, which have averaged 42% utilization over the past 12 months.

Rating Strengths and Outlook

Despite the downgrade, the rating continues to reflect several positive factors:

• Established market position: Over three decades of experience in auto components industry
• Strong client relationship: Preferred supplier status with Maruti Suzuki India Ltd since inception
• Efficient working capital management: Gross current assets estimated at 80-140 days with moderate reliance on working capital debt
• Revenue growth prospects: Expected revenue of Rs 480-500 crore in fiscal 2026 compared to Rs 388 crore in fiscal 2025

CRISIL maintains a stable outlook, believing the company will continue to benefit from its strong relationship with MSIL. The agency has identified specific rating sensitivity factors, with upward movement possible through significant revenue growth of over 30-35% with stable operating profitability of 9-10%, while downward pressure could arise from operating margins falling below 7% or further deterioration in working capital cycle.