Infomerics has reaffirmed Nandan Denim’s BBB/Stable credit rating, citing strong revenue growth and improved financial metrics. The outlook remains stable despite cyclical risks in the denim and textile industry.

 

Author: Rashi Pareek | EQMint 

 

Nandan Denim Limited has received a significant vote of confidence from credit rating agency Infomerics Valuation and Rating Ltd, with the agency reaffirming the company’s long-term and short-term bank facility ratings. The Nandan Denim credit rating reaffirmed at IVR BBB/Stable for long-term facilities and IVR A3+ for short-term facilities reflects improving revenues, a stronger financial risk profile, and the company’s established position as one of India’s largest denim manufacturers.

 

The reaffirmation comes at a time when India’s textile and denim sector continues to face cyclical pressures, volatile raw material prices, and intense competition. Despite these challenges, the rating agency’s assessment highlights Nandan Denim’s operational resilience and balance sheet strengthening.

 

Details of the Reaffirmed Credit Ratings

As per the Infomerics press release dated January 6, 2026, the ratings cover bank facilities aggregating ₹339.74 crore, which include both long-term and short-term instruments.

 

• • Long-term facilities: ₹279.74 crore (reduced from ₹333.20 crore), rated IVR BBB/Stable

• • Short-term facilities: ₹60 crore (reduced from ₹61 crore), rated IVR A3+

The rating action has been marked as “Reaffirmed”, with a Stable outlook, indicating that Infomerics expects Nandan Denim to maintain its current credit profile over the medium term.

 

This Nandan Denim credit rating reaffirmed decision also factors in the reduction in overall exposure, reflecting tighter capital discipline and gradual deleveraging by the company.

 

Why the Nandan Denim Credit Rating Was Reaffirmed

According to Infomerics, the Nandan Denim credit rating reaffirmed continues to be supported by several positive business and financial developments. Key among them is the sharp growth in operating income during FY25.

 

The company reported a Total Operating Income (TOI) of ₹3,546.68 crore in FY25, compared with ₹2,010.09 crore in FY24, marking a growth of over 76%. This growth was primarily driven by higher domestic sales and inspection and batching work, highlighting strong demand conditions and improved capacity utilisation.

 

While EBITDA increased modestly to ₹128.21 crore, margins moderated to 3.61% from 5.88% in the previous year, reflecting cost pressures common across the textile industry. Despite margin compression, Infomerics noted that revenue momentum and operational scale remain supportive of credit quality.

 

Improving Financial Risk Profile Strengthens Outlook

A critical factor behind the Nandan Denim credit rating reaffirmed is the company’s improving financial risk profile. As of March 2025, Nandan Denim’s adjusted net worth rose to ₹608.72 crore, up from ₹582.08 crore a year earlier. This improvement was driven by profit accretion and a reduction in total debt.

 

Key leverage metrics showed notable improvement:

 

• • Long-term debt-to-equity ratio improved to 0.16x from 0.26x

• • Overall gearing declined to 0.41x from 0.57x

• • Interest coverage ratio strengthened to 3.49x, up from 2.50x

These indicators underline management’s focus on balance sheet stability—an important consideration in a cyclical industry like denim manufacturing.

 

Strong Operating Track Record and Integrated Manufacturing

Infomerics also cited Nandan Denim’s long-standing operating track record as a key rating strength. The company is part of the Chiripal Group, a diversified textile conglomerate with a presence across yarn manufacturing, fabric processing, and value-added textiles.

 

Nandan Denim operates a fully integrated manufacturing facility, covering spinning, weaving, and fabric finishing, with an annual production capacity of 110 million metres. This integrated structure provides operational efficiency, cost control, and supply-chain reliability—critical advantages that support the Nandan Denim credit rating reaffirmed decision.

 

In addition, the company sources its power requirements largely through captive generation, with over 36% coming from renewable energy sources. This reduces exposure to grid power costs and supports margin stability.

 

Industry Risks That Continue to Constrain the Rating

While reaffirming the rating, Infomerics also highlighted key constraints that prevent an upgrade at this stage. The denim industry remains inherently cyclical, with demand and pricing closely tied to global economic conditions, fashion cycles, and inventory levels.

 

The agency also pointed to volatility in raw cotton prices as a structural risk. Cotton remains the primary raw material for denim manufacturers, and fluctuations in cotton prices can significantly impact profitability. Given the fragmented and competitive nature of the textile industry, companies often struggle to fully pass on higher input costs to customers.

 

These factors mean that while the Nandan Denim credit rating reaffirmed reflects stability, upward movement in ratings will depend on sustained margin improvement and further strengthening of liquidity metrics.

 

Liquidity Position Remains Adequate

Infomerics assessed Nandan Denim’s liquidity as adequate, supported by steady cash flows from operations. The company is expected to generate cash accruals of ₹77–83 crore during FY26–FY28, against scheduled debt repayments of ₹12–34 crore over the same period.

 

As of March 31, 2025, the company reported a current ratio of 1.49x and a quick ratio of 1.16x, reflecting comfortable short-term liquidity. Average working capital utilisation remained moderate at around 49%, further supporting the stable outlook assigned to the company.

 

Withdrawal of Small Term Loan Rating

In a separate development, Infomerics withdrew its rating on a ₹2.68 crore term loan facility from Karnataka Bank, following receipt of a ‘No Due Certificate’. The withdrawal is in line with the agency’s policy and does not impact the broader Nandan Denim credit rating reaffirmed for existing facilities.

 

What the Rating Reaffirmation Means for Stakeholders

For lenders, the Nandan Denim credit rating reaffirmed provides reassurance about the company’s creditworthiness and ability to meet its financial obligations. For investors and market participants, it signals stability and gradual improvement in financial health, even as the broader textile sector remains competitive and cost-sensitive.

 

From a business standpoint, the reaffirmed rating allows Nandan Denim to access funding at reasonable costs and continue investing in operational efficiency, sustainability initiatives, and capacity optimisation.

 

Bottom Line

The Nandan Denim credit rating reaffirmed by Infomerics reflects a careful balance between strong revenue growth, improving leverage, and the structural risks inherent in the denim and textile industry. While challenges around margin volatility and raw material prices persist, the company’s integrated operations, renewable energy usage, and disciplined financial management underpin a stable outlook.

 

Sustained profitability improvement and continued balance sheet strengthening could pave the way for future rating upgrades.

 

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Resource Link: Nandan Denim Limited

 

Disclaimer: This article is for informational purposes only and does not constitute investment advice.