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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 21.00 | ACUITE A- | Stable | Assigned | - |
| Bank Loan Ratings | 136.00 | ACUITE A- | Stable | Upgraded | - |
| Bank Loan Ratings | 33.00 | - | ACUITE A2+ | Assigned |
| Bank Loan Ratings | 187.00 | - | ACUITE A2+ | Upgraded |
| Total Outstanding | 377.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuite has upgraded the long-term rating to 'ACUITE A-' (read as ACUITE A minus) from 'ACUITE BBB+' (read as ACUITE triple B plus) and the short-term rating to 'ACUITE A2+' (read as ACUITE A two plus) from 'ACUITE A2' (read as ACUITE A two) on the Rs. 323.00 crore bank facilities of Mafatlal Industries Limited (MIL). The outlook is 'Stable'.
Also, assigning the long-term rating of 'ACUITE A-' (read as ACUITE A minus) and the short-term rating of 'ACUITE A2+' (read as ACUITE A two Plus) on the Rs. 54.00 crore bank facilities of Mafatlal Industries Limited (MIL). The outlook is 'Stable'. Rationale for the rating upgrade The rating upgrade is majorly on account of consistent growth in the operating performance of the company marked by improvement in operating income and profitability margins. The rating considers the extensive experience of promoters, long track record of operations along with healthy financial risk profile, comfortable working capital nature of operations and strong liquidity position of the company. The Company’s focused transformation strategy, underpinned by an asset-light model, has strengthened its business, diversified its revenue streams, and enabled the company to tap into new growth opportunities in a scalable, profitable manner. The rating continues to draw comfort from MIL’s comfortable capital structure and monetizable assets in the form of unencumbered shares of NOCIL Limited. However, the rating remains constrained by the risks associated with government tenders and their potential impact on the company’s operations and company’s exposure to intense competition within a fragmented industry. |
| About the Company |
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Mafatlal Industries Limited (MIL) incorporated in the year 1913 by Mr. Mafatlal Gagalbhai, is one of India’s oldest textile manufacturers and a part of the Arvind Mafatlal Group. The Company is currently led by Mr. Hrishikesh Arvind Mafatlal, Chairman and his son Mr. Priyavrata H Mafatlal, Managing Director and is based out of Mumbai, Maharashtra. In FY24, the company reclassified its business in three segments: Textile and textile related products, digital infrastructure, and consumer durables and others. MIL operates an integrated manufacturing facility in Nadiad, equipped with spinning, weaving, dyeing and processing capabilities. In addition, the Company is also engaged in the supply of textiles and related products, digital infrastructure and consumer durable products by participating in various Government tenders. The company has a presence of over eleven decades in textile manufacturing.
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| Unsupported Rating |
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Not Applicable
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| Analytical Approach |
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Acuité has considered the standalone business and financial risk profiles of Mafatlal Industries Limited (MIL) for arriving at the rating.
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| Key Rating Drivers |
| Strengths |
| Reputed business with a vintage track of operations
MIL is a 120-year-old textile company in India and part of Arvind Mafatlal Group founded by Mr. Mafatlal Gagalbhai. The current promoters of the company have more than six decades’ experience in the business and are involved in day-to-day operations as well as strategic decision making of the company. Chairman, Mr. Hrishikesh Mafatlal has an experience of more than 47 years and is on the board of MIL since 1979. Mafatlal is one of the oldest brands recalled for its presence in the textiles industry for readymade garments, school uniforms, corporate garments, home textiles, etc. MIL’s business is spread across the country with a robust dealer and B2B network with more than 1000 dealers and 25,000 retailers. As part of its transformation strategy, Company adopted an “Outsourcing led asset light business model” to drive sustainable and profitable growth. Currently, the Company operates through three major segments, namely Textiles and related products, Digital Infrastructure and Consumer Durables. Acuité believes that with a vast experience of the management along with distinguished and diversified product profiles and with an established brand name of “Mafatlal” the business risk profile is expected to remain comfortable and will support the operations over the medium term.
Improvement in scale of operations and profitability
The Company delivered an exceptional quarter, with a surge in revenue from operations by 174.5 percent from Rs. 451.83 Cr. in Q1FY25 to Rs.1,240.22 Cr. in Q1FY26. This performance was primarily driven by the concentration of execution of large institutional orders in Q1FY26. The Company also reported a healthy PBT of 42.26 Cr. in Q1FY26 against Rs. 23.57 Cr. in Q1FY25 supported by enhanced margin performance, leveraging growth from its Institutional and Uniform business. The Textile and Related Products segment showed notable improvement driven by the Company’s focus on providing complete uniform solutions for both schools and corporates and cost optimization measures undertaken in the past followed by continuous improvement in operational efficiencies.
The operations of the company reported growth in operating income to Rs. 2807.23 Cr. in FY25 as against Rs. 2078.41 Cr. in FY24, reflecting a YoY growth of 35.07 percent in FY25. This strong performance was driven by the execution of large institutional orders under consumer durable segment and textile and related segment. Also, the company has a healthy running order book worth Rs. 1000 Cr. as on June 2025. The company has reported the operating profit of Rs. 68.84 Cr. in FY25 against Rs. 45.57 Cr.in FY24. The operating profit margin of the company stood at 2.45 percent in FY25 as against 2.19 percent in FY24. The PAT margin stood at 3.50 percent in FY25 against 4.75 percent in FY24. Acuite believes, the sustenance of operating margins while consistently increasing its scale will remain a key monitorable. Healthy Financial Risk Profile
The financial risk profile of the company remained healthy marked by high net worth, below unity gearing and comfortable debt protection metrics. The tangible net worth stood high at Rs. 735.65 Cr. in FY25 and Rs. 811.24 Cr. in FY24. The total debt of the company stood at Rs. 70.10 Cr. in FY25 as against Rs. 82.06 Cr. in FY24. The total debt of FY25 comprises of Rs. 37.49 Cr. of long-term debt and Rs. 32.61 Cr. of short-term debt. The gearing of the company stood similar at 0.10 in FY25 and FY24. The TOL/TNW stood at 0.80 times in FY25 as compared to 1.20 times in FY24. The debt protection metrics improved with debt service coverage ratio (DSCR) rising to 4.40 times in FY25 from 3.97 times in FY24. and interest coverage ratio (ICR) improving to 9.17 times in FY25 against 7.13 times in FY24. Going forward, the company’s financial risk profile is expected to further improve due to its sustainable growth in order book.
Comfortable working capital operations The company’s working capital is comfortable, marked by improvement in gross current assets (GCA) days from 86 days for FY25 compared to 169 days in FY24. This improvement was driven by reduction in receivable days to 63 days for FY25 as compared to 113 days for FY24. The inventory levels of the company remained stable at 13 days in FY25 and 14 days in FY24. The creditor days also improved from 66 days for FY25 as against 158 days for FY24. The Company has an average fund based working capital utilization of ~ 41 percent and non-fund-based utilization of ~38 percent in the last 12 months ended June 2025. Acuité believes that the working capital requirement is likely to remain at similar levels in the near to medium term. |
| Weaknesses |
| Exposure to Intense Competition within a Fragmented Industry and risk inherent to government tenders
MIL operates in a highly fragmented and competitive textile industry, which limits pricing flexibility and puts pressure on profitability margins. Furthermore, a significant portion of MIL’s revenue is derived from government tenders, exposing the company to risks associated with changes in government spending, shifting policy priorities, or political instability. However, participation in tenders backed by budgetary allocations provides risk mitigation to certain extent. Any decline in government procurement or delays in tendering processes could materially impact the company’s revenue visibility and growth prospects. |
| Rating Sensitivities |
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| Liquidity Position |
| Strong |
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The liquidity position of the company remained strong on account of strong net cash accruals against matured debt obligations. The net cash accruals of the company stood at Rs. 113.17 Cr. against matured debt obligations of Rs. 17.28 Cr. in FY25. Further, the company is expected to generate sufficient net cash accruals against its repayment debt obligations. The Company has an average fund based working capital utilization of ~ 41 percent in the last 12 months ended June 2025, providing significant cushion of undrawn limits. The company maintains an unencumbered cash balance of Rs. 51.17 Cr. as on 31st March 2025. The Company holds 2.52 Cr shares (15.13 percent having current market value of Rs. 470 Cr.) of NOCIL Ltd, with pledge of only 0.47 Cr shares, providing the flexibility of monetizing, if required. However, this will remain susceptible to market fluctuations. Acuité believes that going forward the company is likely to maintain adequate liquidity position on account of steady accruals.
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| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 25 (Actual) | FY 24 (Actual) |
| Operating Income | Rs. Cr. | 2807.23 | 2078.41 |
| PAT | Rs. Cr. | 98.14 | 98.75 |
| PAT Margin | (%) | 3.50 | 4.75 |
| Total Debt/Tangible Net Worth | Times | 0.10 | 0.10 |
| PBDIT/Interest | Times | 9.17 | 7.13 |
| Status of non-cooperation with previous CRA (if applicable) |
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Not Applicable
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| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Trading Entities: https://www.acuite.in/view-rating-criteria-61.htm |
| Note on complexity levels of the rated instrument |
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