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| Product | Quantum (Rs. Cr) (SEBI) | Quantum (Rs. Cr) (Other FSR) | Long Term Rating | Short Term Rating | Regulated By |
| Bank Loan Ratings | 0.00 | 2.00 | ACUITE BBB- | Stable | Assigned | - | RBI |
| Bank Loan Ratings | 0.00 | 62.00 | ACUITE BBB- | Stable | Reaffirmed | - | RBI |
| Bank Loan Ratings | 0.00 | 30.00 | - | ACUITE A3 | Reaffirmed | RBI |
| Total Outstanding | 0.00 | 94.00 | - | - | - |
| Total Withdrawn | 0.00 | 0.00 | - | - | - |
| Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
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Rating Rationale |
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Acuite has reaffirmed its long-term rating of 'ACUITE BBB-' (read as ACUITE triple B minus) and short-term rating of 'ACUITE A3' (read as ACUITE A three) on the Rs. 92.00 Cr. bank facilities of Nestor Pharmaceuticals Limited(NPL). The Outlook remains 'Stable'.
Further, Acuite has assigned its long-term rating at 'ACUITE BBB-' (read as ACUITE triple B minus) on Rs. 2.00 Cr. bank facility of Nestor Pharmaceuticals Limited (NPL). The outlook is 'Stable'. Rationale for rating The reaffirmation of rating takes into account of company’s experienced management, established track record of operations, and longstanding relationships with government authorities. Further, the rating reflects the company’s moderate financial risk profile with comfortable debt coverage indicators. However, the rating is constrained by its moderation in operating performance in FY26, working capital-intensive operations, exposure to intense competition in the fragmented pharmaceutical industry, and susceptibility to foreign exchange fluctuation risks. Additionally, vulnerability to changes in government and regulatory policies, along with volatility in raw material prices, continues to remain a key rating sensitivity. |
| About the Company |
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Incorporated in 1975, Delhi based, Nestor Pharmaceuticals Limited is engaged in manufacturing of medicines. The company has expertise in manufacturing and marketing of a wide array of ethical allopathic branded and generic formulations. The existing product portfolio consists products in the form of Tablets, Capsules, Injectable, Syrups / Suspension, Ointments, Dry Powder, Ear/ Eye Drops and so on in various therapeutic segments including Cardiovascular, Anti Diabetic, Anti-Malarial, Anti allergic, Anti-Diarrheal, Anti TB, Anti Inflammatory, Anti-Depressant, Multi Vitamins, Antacid, Analgesic, AntiPyretic, Antibiotics, Cough & Cold, Pain Management, Muscle Relaxant. The company has two manufacturing plants located at Faridabad and Goa. Mr. Rahul Sehgal, Mr. Bhanu Prakash Tiwari, Mr. Adarsh Pal Singh, Mr. Bharat Ram and Mr. Bhisham Singh are directors of the company.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profiles of Nestor Pharmaceuticals Limited to arrive at the rating. |
| Key Rating Drivers |
| Strengths |
| Established track record of operations and experienced management
NPL was incorporated in 1975. The day-to-day operations are managed by Mr. Rahul Sehgal, who has been associated with the pharmaceutical industry for more than four decades. Majority of NPL's revenue is generated from various state governments including Kerala, Uttar Pradesh, Andhra Pradesh, West Bengal, etc. Additionally, the company also makes direct sales to pharmacies through its distribution channels and export orders. Having operated in the industry for decades, the management has established a strong network with suppliers and customers. The company also has presence in the export markets of Afghanistan, Myanmar,Ghana and Nigeria and continues to strengthen its export business in non-regulated markets while preparing for entry into regulated European markets. Therefore, the company is in the process of upgrading its Goa facility for EU-GMP-compliant production. Moderate financial risk profile The financial risk profile of the company remains moderate, supported by a healthy net worth of Rs. 94.56 Cr. as on March 31, 2026, compared to Rs. 89.50 Cr. as on March 31, 2025. The improvement in net worth was driven by the accretion of profits into reserves. Although the total debt increased to Rs. 56.96 Cr. in FY26 from Rs. 49.96 Cr. in FY25, primarily due to higher working capital requirements, the capital structure remained comfortable, with a gearing ratio of 0.60 times as on March 31, 2026. The company's debt protection metrics moderated however remained healthy with interest coverage ratio and DSCR standing at 2.48 times and 1.33 times, respectively, in FY26. Moreover, the overall financial risk profile continues to derive comfort from the healthy net worth, comfortable capital structure, and improvement in the TOL/TNW ratio to 1.11 times in FY26 from 1.18 times in FY25. |
| Weaknesses |
| Decline in operating performance in FY26
The company’s operating performance declined in FY26, with revenue moderating to Rs. 215.78 Cr. from Rs. 221.72 Cr. in FY25, primarily due to product rationalization, wherein certain low-margin and commercially unviable products were discontinued amid elevated API prices following the West Asia crisis, as the company was unable to pass on the increased costs. Revenue was further impacted by the company's selective reduction in participation in low-value government tenders, particularly in Maharashtra, and reduced focus on the multivitamin and multimineral segment due to higher raw material costs. Consequently, the EBITDA margin declined to 7.49% in FY26 from 11.86% in FY25, owing to higher API costs under fixed-price government contracts, supply chain disruptions, and penalties for delayed deliveries under certain government orders. Further, the PAT margin declined to 2.35% from 5.56% due to lower operating profitability and higher depreciation expenses. Going forward, the company expects growth supported by increased focus on antibiotic formulations, entry into the ethical pharmaceutical segment with an initial portfolio of 18 products, expansion into new export markets, and planned supplies to European markets from its upgraded Goa facility from January 2027 onwards. Therefore, improvement in the operating performance remains a key rating monitorable. Intensive working capital operations The working capital operations of the company remained intensive, with gross current asset days standing at 269 days in FY26 (266 days in FY25), primarily driven by the elongated receivable cycle. The company primarily caters to state government authorities, resulting in a stretched debtor cycle, with debtor days remaining high at 217 days in FY26. However, the debtor profile is expected to improve going forward with the company's increasing focus on exports and pharmacy supplies, which generally have shorter realization periods. Further, creditor days reduced to 83 days in FY26 from 107 days in FY25. The company procures raw materials primarily from domestic suppliers and does not have any significant dependence on imports. Therefore, the average utilization of fund-based and non-fund-based bank limits remained high at 92.28% and 87.54%, respectively, during the six months ended August 2026. Acuité believes the company's working capital requirements are likely to remain intensive over the medium term, given the nature of its operations. Intense competition and exposure to volatility in input prices The company operates in a highly competitive and regulated pharmaceutical industry, facing competition from both large and small industry participants. The industry remains exposed to fluctuations in raw material prices, rising logistics costs, and increasing selling expenses, which may impact profitability. Further, pharmaceutical manufacturing facilities are subject to regular inspections and approvals by domestic and international regulatory authorities, and any adverse observations, restrictions, or prohibitions may materially affect operations. Additionally, given the company’s significant dependence on government tender business, timely flow and award of tenders remain key factors for maintaining revenue levels. |
Rating Sensitivities
| Potential triggers (individual or collective) for an upward rating action: |
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| Potential triggers (individual or collective) for a downward rating action: |
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| Liquidity Position |
| Adequate |
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The liquidity profile of the company is adequate, marked by net cash accruals of Rs. 7.86 Cr. in FY26 against debt repayment obligations of Rs. 4.19 Cr. during the same period. Further, the company is expected to generate net cash accruals in the range of Rs. 11-15 Cr. over the medium term, which are estimated to remain sufficient against annual debt repayment obligations of around Rs. 3.65 Cr. The average utilization of the fund-based and non-fund-based bank limits remained high at 92.28% and 87.54%, respectively, during the six months ended August 2026. The company has availed ECLCGS facility of 10.25 Cr. in May & June 2026 which shall provide liquidity cushion. The current ratio stood at 1.65 times as on March 31, 2026, while cash and bank balances were modest at Rs. 0.06 Cr. as on the same date.
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| Outlook: |
| Stable |
| Other Factors affecting Rating |
| None. |
| Particulars | Unit | FY 26 (Actual) | FY 25 (Actual) |
| Operating Income | Rs. Cr. | 215.78 | 221.72 |
| PAT | Rs. Cr. | 5.06 | 12.33 |
| PAT Margin | (%) | 2.35 | 5.56 |
| Total Debt/Tangible Net Worth | Times | 0.60 | 0.56 |
| PBDIT/Interest | Times | 2.48 | 3.36 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None. |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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| Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
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Contacts |
List of instruments and names of regulators of the instruments |
