News Stocks CRISIL Downgrades Machino Plastics Rating to BB+/Stable from BBB-/Stable on Rs 172.3 Crore FacilitiesCRISIL Downgrades Machino Plastics Rating to BB+/Stable from BBB-/Stable on Rs 172.3 Crore Facilities
CRISIL Ratings downgraded Machino Plastics Limited's long-term bank loan facilities to 'BB+/Stable' from 'BBB-/Stable' on Rs 172.3 crore facilities due to declining operating profitability (6.91% up to September 2025 vs 8.4% in fiscal 2025) and leveraged capital structure with TOLTNW ratio of 5.30 times. Despite revenue growth to Rs 388.77 crore in FY25 and strong relationship with Maruti Suzuki, the company faces stretched liquidity with modest cushion between cash accruals and debt obligations at 1.0-1.3 times over medium term.
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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:
| Instrument | Amount (Rs in crore) | Rating Action |
|---|---|---|
| Long-term Fund-based Limits | 172.3 | CRISIL BB+/Stable |
| Total | 172.3 |
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:
| Financial Metric | FY 2025 | FY 2024 | Change |
|---|---|---|---|
| Operating Income | Rs 388.77 crore | Rs 337.77 crore | +15.1% |
| Reported PAT | Rs 8.56 crore | Rs 3.69 crore | +132.0% |
| PAT Margins | 2.20% | 1.09% | +111 bps |
| Adjusted Debt/Networth | 3.35 times | 1.97 times | +70.1% |
| Interest Coverage | 2.83 times | 3.91 times | -27.6% |
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.
Historical Stock Returns for Machino Plastics
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +3.94% | +5.03% | -9.69% | +10.76% | +13.95% | +245.41% |
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