The agency has reaffirmed its ‘Crisil A1+’ rating on the short-term bank facilities of Epigral.

Crisil Ratings stated that the rating action reflects sustenance of the strong business risk profile of Epigral, supported by its continued focus on speciality and derivative business (54% share in revenue in the first nine months of fiscal 2025, compared with 42% in the corresponding period of previous fiscal and 30% in fiscal 2023), that is expected to improve further and contribute to around two-third of the revenue over the next two to three fiscals.

The revenue grew 37% on-year to Rs 1,923 crore in the first nine months of fiscal 2025, driven by volume growth of 15%, majorly from the derivatives and speciality business.

The revenue is expected to grow at a similar rate in fiscal 2025, with the expectation of the second half remaining stronger compared with the first half on account of seasonal demand for the key products namely, chlorinated polyvinyl chloride (CPVC) and epichlorohydrin (ECH).

Epigral’s EBITDA margin increased to 28% in the first nine months of fiscal 2025 from 23.5% in the first nine months of fiscal 2024 (24.9% in fiscal 2024), due to continued focus on value-added offerings, and is expected at 27-28% in fiscal 2025.

Furthermore, the rating action also factors in sustenance of the strong financial risk profile. Epigral has strengthened its balance sheet by the recent equity raise of Rs 333 crore via qualified institutional placement (QIP) and majorly utilised the proceeds towards the retirement of debt, leading to overall debt declining to Rs 570 crore as on 31 December 2024 from Rs 895 crore as on 30 September 2024.

The return on capital employed (RoCE) stood at 16.2% in fiscal 2024 and is expected to be around 22% in fiscal 2025.

These strengths are partially offset by the company’s high albeit reducing dependence on the intensely competitive chlor alkali industry, exposure to regulatory risks, vulnerability of the operating margin to fluctuations in caustic soda prices and exposure to project implementation risks.

Epigral is a leading integrated manufacturer of chemicals in India. Epigral is the first to set up an Epichlorohydrin plant and largest capacity plant of CPVC, in India. Along with ECH and CPVC, Epigral is a leading manufacturer of caustic soda, caustic potash, chloromethanes, hydrogen peroxide, chlorine and hydrogen.