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CARE Ratings reaffirms ratings of India Cements at 'AAA/A1+'

26-Jun-26   14:19 Hrs IST

The agency has also affirmed the company's short-term rating at 'CARE A1+'.

CARE Ratings stated that the ratings continue to reflect the company's strong parentage of UltraTech Cement and ICL's strategic importance to UltraTech. Being part of the group, ICL is expected to benefit from the operational synergies flowing through from its parent to ICL in the medium term.

The company has installed cement capacities of 14.75 metric tonne per annum (MTPA) with 13.25 MTPA in South India, having an established market position in South India. This is critical to UltraTech, which has significantly increased its presence in South India by acquiring ICL. The company completed 100% migration of legacy India Cements brands to the UltraTech branding platform.

Going forward, sales are now routed entirely through UltraTech, which leverages its own dealer network and distribution channels, with ICL supplying cement directly to UltraTech as its sole customer.

ICL has integrated operations with presence of captive power plants and limestone reserves. The company's capital structure has significantly improved in FY26 through debt reduction from cash flow generated from recoupment of loans and advances from group entities of erstwhile promoters sale of the Parlie grinding unit, reduction in capital advances, and sale of land and buildings and other non-core assets.

However, CareEdge Ratings notes that ICL has been operating at moderate scale of operations with subdued profitability, partly because of the market-related dynamics and partly legacy issues in addressing operational inefficiencies under erstwhile promoters.

UltraTech announced a capital expenditure plan of Rs 2,000 ' Rs 2050 crore to address operational efficiencies at ICL plants, which is expected to improve operating profitability in the medium term.

Completion of the transition to the UltraTech brand is likely to result in better realisations from FY27 onwards, aided by stronger market positioning, supporting further margin expansion at these plants.

ICL remains exposed to the cyclicality inherent in the cement industry and volatility in input costs and realisations with its presence in Southern India cement market which is characterised with overcapacity.

The ongoing geopolitical tensions may lead to volatility in pet coke prices. The impact is partly mitigated by availability of raw material inventory sufficient for a quarter of operations. Prolonged input cost pressure could lead to higher operating costs and remains a key monitorable.

The India Cements is a leading cement manufacturer in South India. As on March 31, 2026, the company boasts an installed production capacity of 14.75 MTPA. ICL became a subsidiary of UltraTech on 24 December 2024, following UltraTech's acquisition of a 55.49% majority stake, which increased to 81.49% post open offer. Currently, UltraTech holds 75% control in the company.

The scrip had risen 0.35% to end at Rs 384 on the BSE on Thursday.

The Indian stock market is shut today, 26 June 2026, for Muharram.

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