Detailed Rationale

Crisil Ratings continues its rating on the long-term bank facilities and non convertible debentures (NCDs) of Aditya Birla Real Estate Ltd, formerly known as Century Textiles and Industries Ltd (ABREL; part of the Aditya Birla [AB] group) on ‘Rating Watch with Developing Implications’ while reaffirming its ‘Crisil A1+’ rating on the short-term bank facilities and commercial paper of the company. 

 

The long-term rating was placed on watch, following the announcement made by the company in March 2025, regarding the execution of a business transfer agreement with ITC Ltd (ITC; ‘Crisil AAA/Stable/Crisil A1+’) for sale of the paper and pulp division for a total consideration of Rs 3,498 crore. The transaction may conclude by the end of calendar year 2025, subject to receipt of regulatory and other approvals. This division, which has contributed to 75% of ABREL’s consolidated revenue and 58% of overall operating profit or earnings before interest, depreciation, taxes and amortisation [Ebitda] in the nine months of fiscal 2025, has been reported as ‘Discontinuing Operations’ with effect from fiscal 2025. Crisil Ratings will monitor the progress of the transaction, deployment of funds expected from the sale, the company’s business as well as leverage plans towards the real estate division, post conclusion of this transaction, post which the ‘watch’ status would be resolved.

 

Operating income from continuing operations stood at Rs 67 crore for the first quarter of fiscal 2026 (up 3% on-year) while Ebitda was at Rs 38 crore (Rs 30 crore). Operating performance of the paper segment remained moderate in fiscal 2025, with the operating margin at 6-7%.

 

ABREL has achieved healthy sales across its residential projects, and is generating adequate bookings, signifying its strong brand name and attractive project features. Ability to book sales will help the company sustain its business, even after sale of the manufacturing business. In the first quarter of fiscal 2026, the company achieved booking value of Rs 423 crore with collection of Rs 545 crore, which was higher on-year (booking value of Rs 262 crore; collection of Rs 488 crore in the first quarter of fiscal 2025). This includes nearly 78% of the project value booking achieved for its launched projects.

 

ABREL has purchased several land banks across Mumbai, Delhi, Bengaluru and Pune, and has incurred approvals cost for new project launches over fiscals 2024 and 2025, funded via internal cash accrual and debt. Resultantly, gross debt has grown to Rs 5,065 crore as on June 30, 2025 (Rs 5,005 crore on March 31, 2025). The construction for existing projects is being funded via customer collections. Residential real estate projects on owned land and via joint development agreements (JDA) may continue to generate healthy sales bookings, with collections supporting ongoing project construction cost. However, given the large expenses incurred towards the approval cost for new launches, and purchase of land banks and JDAs totaling Rs 1,500-2,000 crore annually, gross debt is likely to be around Rs 6,000 crore in fiscal 2026 and may further increase over the medium term  (without factoring in usage of sale proceeds of paper business for reduction of debt). The company will continue to follow a flexible approach with a mix of asset-light JDA model as well as outright land purchases to build a healthy project pipeline. Any substantial investment in JDAs or new projects could weaken the capital structure of the company, and hence, will remain monitorable. The company continues to benefit from a diversified revenue profile, healthy financial risk profile and adequate liquidity. Furthermore, the ratings benefit from strong, need-based, and timely financial support from the AB group.

 

The ratings continue to reflect ABREL’s growing presence in the domestic real estate residential segment and steady cash flow generation from the commercial real estate segment. These strengths are partially offset by exposure of the residential real estate development business to demand and implementation risk. These risks are mitigated by the group’ proven track record in commercial real estate and focus on quality and timely project completion with healthy bookings for launched projects.

Analytical Approach

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths 

Strong collections from launched residential projects, to support the business, despite likely loss of steady cash flow of paper business post sale

ABREL started developing residential projects in 2010, through a mix of owned land and JDAs with the purchase of land banks, to improve its project pipeline. Despite being a relatively new entrant, the company has entered into new JDAs and has also purchased land across Mumbai, Delhi, Bengaluru and Pune, enhancing its project pipeline with gross development value (GDV) of Rs 70,000 crore. For projects launched till the end of the first quarter of fiscal 2026, the company has seen average bookings of over 78%, providing visibility of steady cash flow in the near to medium term. Strong reception to the launched projects, supported by the Birla brand, provides additional support.

 

While inflow of Rs 400-500 crore from the paper business provided additional support over the last few fiscals, post the sale of the division, the investment requirement in residential real estate development projects would be met through a mix of collections from customers and additional debt, and possibly receipts from sale of the paper division. The company has a major debt obligation of Rs 400 crore (relating to NCDs) due in fiscal 2026, and Rs 650 crore due in fiscal 2027, which can be refinanced or met via sale proceeds from the paper division. Apart from this, the company has a scheduled repayment of Rs 253 crore in fiscal 2026 and Rs 300 crore in fiscal 2027, towards the term loans for its real estate business, and is likely to meet the same via a blend of cash flow from real estate operations and refinancing. The extent of investment in real estate business, ramp-up of projects and the resultant cash flow and debt will be monitorable over the medium term.

 

Steady cash inflow from commercial real estate assets

ABREL has a 22-storey (15 floors for lease and the rest for car parking) commercial building, Birla Aurora, at Worli in Mumbai. With occupancy of property is over 90%, the property generates steady rentals. The second commercial building, Birla Centurion, located at ABREL’s Worli mill compound, also has an occupancy exceeding 90%. Both these properties benefit from a diversified clientele, long-term lease contracts with in-built escalation of 10-15% every three years. Steady annual lease rental income of Rs 140-150 crore should support cash flow over the medium term.

 

Stable financial risk profile, supported by need-based timely financial support from the AB group

With higher investments in real estate, gross debt rose to Rs 4,997 crore as on March 31, 2025, from Rs 2,483 crore as on March 31, 2024, and gearing stood around 1.29 times as on March 31, 2025, from 0.6 time, a year ago. The company is in the growth phase and debt has been raised for funding the purchase of land for upcoming projects.  The company plans to launch projects with GDV of Rs 46,216 crore and saleable area of ~22.9 million square feet (msf), across Mumbai Metropolitan region (MMR), National Capital Region (NCR), Bengaluru and Pune, with area worth ~Rs, 14,000 crore to be launched in fiscal 2026. The company has launched 11 projects, but has availed construction finance only for five projects, totaling around Rs 619 crore. The residential real estate projects of ABREL, on owned land and JDAs, will continue to generate healthy sales booking and the collections likely to cover the construction of the ongoing projects. However, given the large expenses incurred towards the approval cost for new launches, and purchase of land banks and JDAs totaling Rs 1,500-2,000 crore annually, gross debt may increase further. Net debt to Ebitda may peak at 1.9-2.5 times, amid lumpy residential real estate profit booking. However, the proceeds from the sale of the paper business may help improve the leverage and continue to be monitorable.

 

Debt protection metrics are healthy with interest coverage ratio of 5.0 times in fiscal 2025, with interest cost related to projects being inventorised. Debt as compared to cash flow from the real estate segment is high; however, with expected inflow from launched projects where bookings are already in place, these metrics should improve over the medium to long term. ABREL also benefits from the strong and need-based timely financial support provided by the AB group. The promoter group will continue to provide timely financial support in future, in case of exigencies, as demonstrated in the past.

Key Rating Drivers - Weaknesses 

Exposure to demand and implementation risks in the residential real estate business

ABREL plans to substantially expand its residential real estate business. It has launched projects totaling 13.72 msf and worth Rs 23,653 crore across locations. Additional phases and projects, totaling 22 msf and expected GDV of Rs 46,216 crore. will be launched over the next 2-3 years.

 

The company has achieved healthy sales traction in residential projects launched so far, as reflected in total booking value of ~Rs 17,720 crore or ~78% of the aggregate launched project value, across all projects till the first quarter of fiscal 2026. Various project launches are being planned over the next few quarters, and hence, being at an early stage of development exposes ABREL to demand and implementation risk.

 

Nevertheless, it is expected to benefit from the established Birla brand, as demonstrated in healthy sales booking. Furthermore, the development track record of ABREL, having completed 0.64 msf of Grade A commercial projects in Mumbai, strong bookings in launched projects of 13.72 msf, along with phased launches and tie-ups with reputed contractors, should help mitigate project implementation risk. Progress on the projects and ramp-up in scale will, nevertheless, be closely monitored.

 

Susceptibility to geographic concentration risk

Majority of the inventory (54% of the ongoing area) is concentrated in Bengaluru, wherein the company has entered the market via JDAs, though the risk is mitigated by healthy bookings. However, for the upcoming projects with GDV of 46,216, around 70% of revenue potential is from MMR. In addition, the company is expanding its presence in markets across Pune and NCR, as indicated by the recent land acquisition and launches in these areas. Hence high geographical diversification and presence is expected over the medium to long term.

Liquidity Strong

Liquidity is backed by healthy net cash accrual and prudent working capital management. Liquid surplus was Rs 1,119 crore as at end-1QFY26, 2026. Bank limit utilisation averaged 7% over the six months through August 2025. Debt obligation of Rs 400 crore (relating to NCDs) is due in fiscal 2026, while Rs 650 crore is due in fiscal 2027, which can be refinanced or met out of sale proceeds of the paper division. The company has a scheduled repayment of Rs 253 crore in fiscal 2026 and Rs 300 crore in fiscal 2027, towards the term loans for its real estate business, and is likely to meet the same via a blend of cash flow from real estate operations and refinancing. Moderate gearing, large networth and sizeable owned land bank provide strong financial flexibility. ABREL is expected to maintain adequate liquidity in the near to medium term. Besides, timely support from the AB group is also expected to be forthcoming in the event of any exigencies.

 

ESG profile

The environment, social, and governance (ESG) profile of ABREL supports its already strong credit risk profile.

 

The paper, textiles and real estate sectors can have a significant impact on the environment, owing to high water consumption, waste generation and greenhouse gas emissions. The sector’s social impact is characterised by health hazards, leading to high focus on employee safety and wellbeing, and the impact on the local community, given the nature of operations. ABREL has continuously focused on mitigating its environmental and social risks.

 

Key ESG highlights

• Scope 1 and 2 emissions intensity grew by nearly 7% in compounded terms between fiscals 2023 and 2025, to ~2.21 tCO2e/Rs crore of revenue
• The company has integrated renewable sources such as solar and biomass in its energy consumption mix. In fiscal 2025, its share of renewable energy in the total energy consumption mix stood at ~38% (as compared to ~32% in fiscal 2024).
• It reported zero fatalities among employees and nearly 61% of employees received training on safety measures in fiscal 2025. Further, the gender diversity has also improved to ~12% (from ~10% in fiscal 2024).
• Its governance structure is characterised by 8 board members, 50% of the board comprising independent directors, split in chairman and CEO positions, and presence of an investor grievance redressal mechanism and extensive disclosures.

 

There is growing importance of ESG among investors and lenders. ABREL’s commitment to ESG principles will play a key role in enhancing stakeholder confidence, given its high share of market borrowings in its overall debt and access to both domestic and foreign capital markets.

Rating sensitivity factors

Upward factors

• Sustained improvement in business risk profile, backed by healthy sales and collections, along with well-balanced distribution of projects in different stages
• Improvement in capital structure, with sustained debt reduction and gross debt (excluding lease rental discounting debt) to operating cash flow remaining below 2 times, along with adequate liquidity
• Improvement in the credit risk profile of the AB group

 

Downward factors

• Material weakening in the business risk profile, triggered by slackened saleability of projects or substantial delays in project execution
• Weakening of the financial risk profile, owing to higher-than-expected debt, including for land acquisition, and lower-than-expected cash flow, leading to operating cash flow to interest remaining below 5 times 
• Material reduction in liquidity
• Deterioration in the credit risk profile of AB group

About the Company

Incorporated in 1897 by the promoter, Mr BK Birla, ABREL remains the flagship company of the BK Birla group, which operated under the name, Century Textiles and industries Ltd (Century). Following an equity infusion in March and December 2015, the AB group became a significant stakeholder in the company. As of June 2025, the promoters held ~50% stake in the company. Mr Kumar Mangalam Birla was appointed as the Chairman effective July 20, 2019, following the demise of Mr BK Birla. Century operated a cotton textile mill until 1951, which was divested in fiscal 2023. Since then, it has progressively expanded into diverse fields, including pulp and paper segments.

 

In fiscal 2018, the company incorporated a wholly owned subsidiary, Birla Estates, to focus on the residential real estate business, and was renamed as ABREL in October 2024.

Key Financial Indicators 

Particulars	Unit	2025	2024
Operating income	Rs crore	1219	1101
PAT	Rs crore	-158	60
PAT margin	%	-12.96%	5.45%
Adjusted debt/adjusted networth	Times	1.29	0.61
Adjusted interest coverage	Times	1.20	8.93

Note: The key financial indicators are updated based on continuing operations only

Any other information: Not Applicable