ICRA reaffirms ratings of Indian Metals with 'stable' outlook

The agency has also reaffirmed the company's short-term rating at '[ICRA] A1+'.

ICRA stated that the ratings reaffirmation factors in the healthy financial performance of Indian Metals & Ferro Alloys Limited's (IMFA) in FY2024 and expected sustenance of the same over the near term, leading to a healthy profitability, net cash accruals and debt coverage indicators.

The ratings also consider the comfortable financial risk profile of the company, which has witnessed a steady improvement over the years following the material deleveraging done since FY2022, supported by attractive ferrochrome spreads.

The ratings continue to favourably factor in the experience of the promoters in the ferro-alloy industry and the established track record of the company as one of the largest exporters of ferro chrome from India.

The ratings also consider IMFA's competitive cost structure, on a global scale, on account of the integrated nature of its operations (it is largely self-reliant in terms of chrome ore and power).

The ratings are, however, tempered by IMFA's exposure to the inherent cyclicality of the ferro-chrome industry.

The ratings also remain constrained by the execution and operational risks associated with the large-scale capex programme of accumulating around Rs. 1,750 crore, to be incurred over the next seven years towards setting up of a greenfield ferrochrome unit at Kalinganagar and brownfield mine expansions.

Indian Metals & Ferro Alloys (IMFA) primarily produces ferro alloys, including charge chrome (high carbon ferro chrome), and has an installed furnace capacity of 190 MVA (2,84,000 metric tonnes per annum (MTPA)) in its two plant sites at Therubali and Choudwar, in Odisha. The company's operations are supported by a 200-MW captive thermal power plant at Choudwar, captive chromite mines and a 4.5-MW solar power plant.

The scrip lost 0.18% to currently trade at Rs 645.75 on the BSE.