Credit rating reaffirmed; outlook revised to Stable from Negative

Credit rating update from CARE Ratings Ltd.

Wed 7 Oct 2026

Long Term / Short Term Bank Facilities

Rs. 480.00 crore — CARE BBB-; Stable / CARE A3

Long Term Bank Facilities

Rs. 15.00 crore — CARE BBB-; Stable

Outlook

revised to Stable from Negative

CARE Ratings Limited has, vide its letter dated 7th October 2026, reaffirmed the ratings on Mukka Proteins' bank facilities and revised the outlook from Negative to Stable. The company shared this with the exchanges along with the agency's press release.

Ratings at a glance

• Long Term / Short Term Bank Facilities: Rs. 480.00 crore — CARE BBB-; Stable / CARE A3 — Reaffirmed; outlook revised from Negative
• Long Term Bank Facilities: Rs. 15.00 crore — CARE BBB-; Stable — Reaffirmed; outlook revised from Negative

What reaffirmed and outlook mean

A credit rating is an agency's view on how safely a borrower can service its debt. "Reaffirmed" means the rating level itself has not changed. The outlook shows the direction the agency sees over the medium term. A shift to Stable from Negative means CARE Ratings no longer sees the negative pressure it had flagged earlier. A BBB- rating sits in the investment grade category, at its lower end.

Why the outlook was revised

• Improvement in operating performance in Q1FY27, backed by rising global fish meal prices and steady demand
• Revenue from operations grew about 187% year-on-year to roughly ₹490 crore in Q1FY27, with about 93% year-on-year rise in average realisations and about 49% year-on-year rise in sales volumes
• PBILDT margin sustained above 9%
• Consolidated inventory down to about ₹800 crore as on August 30, 2026 from ₹867 crore as on March 31, 2026, a reduction of about 24% in inventory volume
• Fund raise of about ₹47 crore in September 2026 through a preferential issue of convertible equity share warrants, of which ₹11.75 crore (the 25% upfront consideration) was received, with the balance receivable by March 2028
• Overall gearing of 1.50x as on June 30, 2026 and PBILDT interest coverage of 2.92x in Q1FY27
• Adequate liquidity, with expected gross cash accruals of ₹95-100 crore p.a. over the next 1-2 years
• Healthy order book of ₹500-550 crore as of mid-August 2026
• A fish meal production facility in Oman, expected to commence operations in H2FY27

What the agency flags as watch points

• Working capital intensive operations; the operating cycle elongated to 198 days in FY26 and 226 days in FY25, compared with 99 days in FY24
• Net cash flow from operations stood at negative ₹107 crore in FY26 (previous year: negative ₹108 crore)
• Raw material cost is over 80% of sales, and raw fish and fish meal prices stay volatile
• Exports contributed over 80% of revenue in FY26 and Q1FY27, so export incentive changes and currency movement matter; about 50% of forex exposure is hedged through forward contracts
• Ratings remain constrained by the working capital intensive nature of the business, raw material and forex volatility, inherent seasonality and regulatory risks

Rating sensitivities

• Positive: substantial increase in scale and PBILDT margin leading to better cash accruals; TOL/TNW below 1.5x with PBILDT interest cover above 3.0x on a sustained basis; average inventory holding period below 150 days on a sustained basis
• Negative: significant decline in scale or PBILDT margin; adjusted overall gearing above 1.6x on a sustained basis; continued elevated inventory holding above 200 days

Brief financials (consolidated, ₹ crore)

• Total operating income: 1014.47 (FY25), 1467.51 (FY26), 489.65 (Q1FY27)
• PBILDT: 102.96 (FY25), 132.78 (FY26), 47.96 (Q1FY27)
• PAT: 48.10 (FY25), 57.09 (FY26), 18.63 (Q1FY27)
• Overall gearing (times): 1.19 (FY25), 1.52 (FY26)
• Interest coverage (times): 2.76 (FY25), 2.48 (FY26), 2.92 (Q1FY27)

What is being rated

The instruments covered are fund-based long-term and short-term bank facilities, including CC/Packing Credit, with the long-term loan maturing on 30-04-2029 and a size of issue of 15.00 crore. The agency's analytical approach is consolidated, covering 15 entities listed as subsidiaries and joint ventures.

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