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Care Ratings reaffirms ratings of Godavari Biorefineries at 'BBB+/A2' with 'stable' outlook

18-Mar-26 16:52 Hrs IST

The agency has also affirmed the company's short-term rating at 'CARE A2'.

Care Ratings stated that the reaffirmation of ratings assigned to bank facilities of Godavari Biorefineries (GBL) reflects the company's adequate operating performance in FY25 and 9M FY26, despite industry-wide headwinds of reduced profitability owing to higher sugarcane prices, restrictions on sugar exports and limited availability of molasses following the restriction on diversion of sugar syrup for ethanol production.

CARE Ratings expects the company's performance to sustain over the medium term, driven by its sizeable crushing and distillery capacities and long track record of operations.

Ratings continue to derive comfort from GBL's integrated sugar unit, proximity to high-yielding sugarcane cultivating regions and diversified product portfolio comprising sugar, distillery, co-generation and bio-based chemicals, which mitigates concentration risk.

GBL's business risk profile also benefits from the company's strong and resourceful promoters, Somaiya Group, with a long track record in agri-based businesses and education sector.

However, ratings continue to remain constrained by the company's moderate capital structure and debt coverage indicators, despite some improvement in FY25 led by sizeable increase in net worth base and prepayment of term loans following the fresh equity infusion through the initial public offering (IPO) in Q3FY25, owing to continued debt-funded capital expenditure for setting up the fungible grain-based distillery and working capital intensive operations.

Ratings also factor in GBL's presence in a highly regulated industry and its exposure to agri-climatic risks and cyclical nature of sugar industry.

Godavari Biorefineries has two units, one is an integrated plant producing sugar, power and industrial alcohol, and second unit produces bio-based specialty chemicals. The company's chemicals division exports ethyl acetate to the Middle East, Africa, and European countries. The company has an in-house retail brand 'Jivana' for the sale of sugar, turmeric, and salt in Rajasthan Maharashtra, Karnataka, and Gujarat.

The company's consolidated net profit increased by 43.23% to Rs 8.25 crore on a 2.81% rise in revenue to Rs 459.85 crore in Q3 FY26 as compared with Q3 FY25.

The scrip jumped 5.22% to end at Rs 324.35 on the BSE.

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