N R Agarwal Industries Limited has informed the Exchange that pursuant to Regulation 30 read with schedule III and other applicable provisions of SEBI Listing Regulations, this is to inform that ICRA Limited on August 25, 2025 has downgraded the long-term rating from [ICRA] A Stable (pronounced ICRA A Stable) to [ICRA]A- Stable (pronounced ICRA A minus Stable) and short-term rating from [ICRA]A1 (pronounced ICRA A one) to [ICRA]A2+ (pronounced ICRA A2 plus) for the rated amount of Rs. 955.64 crores post results of quarter ended June 30, 2025 and announcement of new board plant at Dahej.
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On the reaction day the stock moved 5.7 pts more than Nifty Microcap 250 and 6.1 pts more than its Paper & Paper Products peers, over the same two closes: a difference in percentage points, not a measure of what the filing did.
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ICRA has downgraded N R Agarwal Industries' long-term rating from A (Stable) to A- (Stable) and short-term rating from A1 to A2+, covering a total rated amount of Rs. 955.64 crore. The downgrade follows weaker-than-expected Q1 FY2026 results, with operating profit margin falling to 3.7% from 8.0% a year ago, and the company's announcement of a Rs. 1,200 crore new Multilayer Board plant at Dahej over four years. Profitability has been hurt by cheap paper imports, lower sales realisations, and a 20-day plant shutdown for maintenance. Despite revenue growing 28% in FY2025 to Rs. 1,659 crore, profit collapsed from Rs. 125.5 crore in FY2024 to Rs. 17.7 crore in FY2025, pushing debt-to-operating-profit from 3.1x to 5.8x. The new capex of Rs. 250 crore in FY2026-FY2027 will be partly debt-funded, further pressuring the balance sheet, though liquidity remains adequate with Rs. 52 crore buffer in working capital limits.
Negative for shareholders — the rating cut signals higher borrowing costs and weakened financial flexibility at a time when the company is taking on a large debt-funded expansion. The stock may face near-term pressure, though the outlook remains Stable and the new Dahej plant could support long-term growth if margins recover.