Rain Industries Limited , a leading player in the carbon, advanced materials, and cement sectors, has maintained its 'IND A/Stable' credit rating from India Ratings and Research for its term loan of INR 1,700 million. The affirmation comes despite a challenging year for the company, reflecting its stable financial position and positive outlook for the coming years.

Financial Performance

The company faced headwinds, with consolidated revenue declining by 15% to INR 153,744.00 million, down from INR 181,415.00 million in the previous year. EBITDA margins also contracted, falling to 8.18% from 9.33% in the previous year. However, the rating agency expects revenue and profitability to improve over the medium term, driven by economies of scale from higher utilization levels.

Improved Raw Material Allocation

A key factor supporting the stable outlook is the increased allocation of green petroleum coke (GPC) import quota for the upcoming fiscal years. This is expected to boost capacity utilization to 85%-90% from current levels, particularly benefiting the company's carbon segment. The enhanced quota, along with the ability to import GPC and calcined petroleum coke (CPC) for its Special Economic Zone (SEZ) unit, is likely to drive operational improvements.

Segment Performance

The carbon segment, while still the largest contributor, saw a slight decrease in its share of revenue and EBITDA compared to the previous year. The advanced materials segment showed improvement, while the cement segment faced challenges, reporting an EBITDA loss.

Debt and Leverage

Rain Industries' net leverage increased to 5.43x, up from 3.97x in the previous year. However, the rating agency anticipates this to normalize below 4.0x in the future, with the company already showing signs of improvement as net leverage reduced to 5.18x in the most recent quarter.

Future Outlook

India Ratings expects Rain Industries' return on capital employed (ROCE) to remain stable at 7%-8% in the coming years, supported by normalizing operating profits and reduced impairment losses. The company's focus on debt reduction and minimal planned capital expenditure should further strengthen its financial position.

Conclusion

Despite the challenges faced, Rain Industries' affirmed credit rating underscores the company's resilience and the positive impact of increased raw material allocation. As the company leverages higher capacity utilization and focuses on operational efficiencies, it is well-positioned to navigate the evolving market conditions and potentially improve its financial performance in the coming years.

Rain Industries , a leading vertically integrated global producer of carbon and chemical products, has announced its financial results for the fourth quarter of 2023, revealing a mixed performance with improvements in some areas and ongoing challenges in others.

EBITDA and Margin Improvement

The company reported a notable increase in its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for Q4 2023. EBITDA rose to ₹3.80 billion, up from ₹3.42 billion in the same quarter of the previous year, marking an 11.1% increase. This growth in EBITDA was accompanied by an improvement in the EBITDA margin, which expanded to 10.10% from 9.33% year-over-year.

Revenue Growth

Rain Industries saw a modest uptick in its revenue for the fourth quarter. The company's revenue increased to ₹37.60 billion, compared to ₹36.70 billion in Q4 2022, representing a growth of approximately 2.5%.

Net Loss Situation

Despite the improvements in EBITDA and revenue, Rain Industries continued to face challenges on its bottom line. The company reported a consolidated net loss of ₹1.40 billion for Q4 2023. However, this represents a slight improvement from the ₹1.46 billion loss recorded in the same quarter of the previous year, indicating a marginal reduction in losses by about 4.1%.

Financial Performance Overview

To provide a clearer picture of Rain Industries' Q4 2023 performance, here's a summary of the key financial metrics:

Conclusion

The financial results for Q4 2023 present a complex picture for Rain Industries. While the company has shown improvement in operational efficiency, as evidenced by the growth in EBITDA and EBITDA margin, the persistent net loss indicates ongoing challenges in the overall business environment or internal cost structures.

The slight increase in revenue suggests that Rain Industries has managed to maintain its market position and potentially expand its sales slightly, despite what may be challenging market conditions. However, the continued net loss, albeit slightly reduced, points to the need for further optimization of costs or improvement in high-margin product sales to achieve profitability.

As Rain Industries navigates through these mixed results, stakeholders will likely be watching closely to see how the company plans to leverage its improved operational performance to address the ongoing profitability challenges in the coming quarters.