Credit rating downgraded to BBB+ on profit dip and US tariff impact
KITEX · price
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India Ratings cut Kitex Garments' bank loan rating to IND BBB+/Negative/IND A2 from IND A/Negative/IND A1 on Rs 3,479.8 million of facilities. Reasons: consolidated EBITDA margin collapsed to 0.21% in FY26 from 20.3% in FY25 due to partial absorption of US tariff costs, slow ramp-up at Warangal unit, order delays, and debt-funded capex for KAPL. Net leverage spiked to 638.85x from 4.23x and interest coverage fell to 0.03x from 14.07x. US contributes about 64% of sales. Recovery expected only from FY28.
Negative: rating cut raises borrowing costs and signals serious financial stress; near-term earnings and cash flow remain weak.