Detailed Rationale

Crisil Ratings has reaffirmed its 'Crisil A+/Stable/Crisil A1’ ratings on the bank facilities of CMR Green Technologies Ltd (CMRG; part of the CMR group).

 

The ratings factor sustained improvement in the business risk profile of the CMR group, with improving operating revenue and profitability. Operating income has increased to Rs 6,666 crore in fiscal 2025, witnessing growth of 12% on-year, driven by volume and realisation growth; Ebdita (earnings before interest, tax, dpereicaiton and amortisation) per tonne incresaed to ~Rs 9,400 from ~Rs 7,300. With contribution from newly commissioned capacities, revenue is expected to scale up to around Rs 8,400 crore in fiscal 2026, backed by strong visibility on volume growth, improved product mix and expanding clientele. In the first half of fiscal 2026, the group has reported revenue of Rs 4,362 crore. Operating margin improved from 3.9% in fiscal 2024 to 4.7% in fiscal 2025, and is expected at 5.0-5.5% over the medium term.

The financial risk profile will remain comfortable, supported by healthy networth of Rs 1,519 crore as on March 31, 2025, which is expected to exceed Rs 1,800 crore as on March 31, 2026, aided by profit accretion and an expected Rs 140 crore equity infusion in fiscal 2026 (from sale of 20% stake in CMR Eco Aluminium Pvt Ltd). Althugh debt increased in fiscal 2025 on account of debt-funded capital expenditure (capex) and higher short-term borrowing, capital structure was comfortable with debt to Ebitda ratio of 2.8 times and total outside liabilities to tangible networth (TOLTNW) ratio of 0.84 time, as on March 31, 2025. Due to the ongoing capex of ~Rs 130 crore, debt is expected to incresae, with expected adjusted gearing below 0.6 time and TOLTNW ratio below 1 time in fiscal 2026. Interest coverage ratio is expected above 4.5 times. Larger-than-expected capex, inorganic expansion or acquisition will remain a key monitorable.

 

The ratings continue to reflect the group’s established position in the aluminium recycling industry, supported by strong technical capabilities and reputed joint venture (JV) partners, and a comfortable financial risk profile. These strengths are partially offset by subdued operating profitability and susceptibility to cyclicality in the automobile industry and volatility in metal prices.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of CMRG and its subsidiaries, CMR Nikkei India Pvt Ltd, CMR Toyotsu Aluminium India Pvt Ltd, CMR Eco Aluminium Pvt Ltd, CMR Aluminium Pvt Ltd and CMR Kataria Recycling Pvt Ltd, collectively referred to as the CMR group, owing to significant operational, managerial and financial linkages.

 

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

Key Rating Drivers - Strengths 

Market leadership in the recycled aluminium industry with strong technical capabilities

The CMR group is one of the two major players in the aluminium and zinc casting alloys segment in India. With capacity of over 600,000 tonne per annum as on June 30, 2025, the group has above 60% market share in liquid aluminium and 42-45% market share in the cast alloy segment in terms of volumes. Though the share of aluminium in revenue is 80-85%, product diversity is improving with steel, copper and other materials accounting for 15-20%, as against 10-15% and also introduction of billet segment through CMR NLM Eco Aluminium Private Limited.

 

The group follows the hub-and-spoke model for over-the-road molten aluminium technology in its units that are near the units of major auto original equipment manufacturers (OEMs), resulting in cost savings. This enabled it to develop healthy relationships with customers. Through this shared infrastructure, customers also depend on the group for regular supply of molten aluminium.

 

Investment in various technologies has improved scrap yield. Moreover, JVs with Japanese companies, Nikkei MC Aluminium, Toyota Tsusho Corporation and Nippon Light Metals, have enabled the group to build up capability in liquid/molten alloy transportation.

 

Comfortable financial risk profile

Despite the increase in debt owing to the operationalisation of new plants, ongoing capex and large working capital requirement, the financial risk profile will likely remain comfortable, supported by a healthy capital structure. At the group level, gearing stood at 0.59 time as on March 31, 2025, backed by healthy networth of Rs 1,509 crore even as debt rose to around Rs 894 crore.

Gearing is expected below 0.6 time over the medium term, notwithstanding incremental debt. The TOLTNW ratio is estimated below 1 time (~0.84 time as on March 31, 2025) and expected to remain less than 0.85 time over the medium term, reflecting adequate financial flexibility. The interest coverage and net cash accrual to adjusted debt ratios are expected above 4.5 times and above 25%, respectively, indicating healthy debt servicing ability.

The increase in debt was driven by stretched working capital cycle, as inventory increased due to the operationalisation of new units and receivables stood at 90 days. Nonetheless, the financial risk profile remains comfortable with stable leverage and adequate coverage metrics.

Key Rating Drivers - Weaknesses 

Susceptibility of profitability to industry dynamics and raw material price volatility

The operating margin stands at 4-5% and is expected at a similar level in the near to medium term. The group’s ability to pass on raw material price increases is limited, considering the lead time of around four months from purchase of scrap metal to sales. However, the group has taken several steps to hedge its risk against commodity price fluctuations, including shifting its pricing mechanism from quarterly to monthly resets with customers, which allows faster alignment of input and selling prices, and has begun partially hedging its key commodity through the exchange. These measures have supported improvement in Ebitda per tonne. Adverse movement in raw material prices will continue to impact operating profitability.

 

Customer and industry concentration in the revenue profile and limited pricing power

The CMR group derives ~23% of revenue from the top three customers. Customer concentration exposes the operating performance to demand moderation in the recycled stainless steel segment.

 

Revenue, though diversified, remains closely aligned with performance and demand in the automotive (auto) industry. Owing to high dependence on auto OEMs, the business remains exposed to cyclicality and ability of auto OEMs to sustain operating performance.

Liquidity Strong

Liquidity will remain comfortable, with expected net cash accrual of Rs 250-350 crore against yearly debt obligation of Rs 40-45 crore and capex of ~Rs 130 crore in fiscal 2026 and ~Rs 100 crore in fiscals 2027 and 2028. Fund-based bank limit of Rs 1,331 crore was utilised 53% on average during the 12 months through September 2025. Internal accrual, cash and equivalent and unutilised bank lines will be sufficient to meet debt obligation and working capital requirement. However, the company may depend on debt to fund increased capex or additional working capital requirement.

Outlook Stable

The CMR group will continue to benefit from its leading position in the aluminium recycling industry and the growth prospects in the aluminium recycling business. Steady cash accrual and moderate capex may help sustain healthy financial risk profile over the medium term.

Rating sensitivity factors

Upward factors

• Increase in revenue and operating profitability, with Ebitda per tonne of Rs 11,000-11,500 on a sustained basis
• Improvement in the financial risk profile, driven by efficient working capital management and prudent capex

 

Downward factors

• Decline in operating profitability leading to lower cash accrual
• Large, debt-funded acquisition or capex or stretched working capital cycle weakening the financial risk profile, with gearing at 1.00-1.25 times

About the Group

CMRG is India’s largest producer of aluminium and zinc die-casting alloys with combined annual capacity of 600,000 MT. The group manufactures and sells aluminium-based die cast alloys and zinc alloys in India. It is also engaged in the segregation and sale of metal scrap as a part of manufacturing process (with focus on stainless steel, brass, copper and zinc).

 

CMRG commenced operations in 2006, when it put up a technology plant at Tatarpur, near New Delhi. The plant deployed sophisticated technologies such as twin-shaft shredder, eddy current separator, high-capacity melting furnaces with metal circulation pump and de-coater. The group is operating 12 manufacturing plants, including  five plants under three JVs with Toyota Tsusho Corporation, Nikkei MC Aluminium and Nippon Light Metals.

Any other information: Not applicable