Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AA/Stable/Crisil A1+’ ratings on the bank facilities of Ingersoll Rand India Ltd (IRIL).

 

The ratings continue to reflect IRIL’s established position, backed by strong brands in the domestic compressor manufacturing segment, and technological and operational support from the ultimate parent, Ingersoll Rand Inc (IR Inc; rated ‘BBB/Stable’ by S&P Global Ratings). The ratings also factor in IRIL’s healthy financial risk profile, supported by a debt-free balance sheet. These strengths are partially offset by exposure to risks related to cyclicality in demand from end-user segments, susceptibility of the operating profitability to volatility in raw material prices and high dividend payout, leading to constrained networth and liquidity.

 

IRIL reported revenue of Rs 1,353 crore in fiscal 2025 (11.3% on-year growth). Sales of whole goods/complete machines grew 14% on-year to Rs 611 crore, accounting for over 45% of the overall sales. The services and after-market portfolio recorded sustained growth, reaching Rs 98 crore, with spare part sales up 26% on-year and services, up by 7% on-year. Revenue from exports declined moderately by 2% on-year to Rs 250 crore, due to lower offtake from group companies. For the first nine months of fiscal 2026, revenue grew by 8% to Rs 1,092 crore, as against Rs 1014 crore in the corresponding quarter of the previous fiscal, driven by healthy performance across most of the domains.

 

Financial risk profile remains robust, supported by a debt-free balance sheet, and networth of around Rs 650 crore and cash surplus of around Rs 220 crore as on September 30, 2025. The company has set up a new plant at Sanand, Gujarat, to reduce bottlenecks at the existing plant. The capex has been funded via internal accrual. The plant should be operational by end of the first quarter of fiscal 2027. While centrifugal compressors would be produced at the new plant, the company plans to add new products to the portfolio. With no major capital expenditure (capex) plans for fiscal 2027, focus will be on timely operationalisation and stabilisation of the capex.

Analytical Approach

Crisil Ratings has considered the standalone business and financial risk profiles of IRIL.

Key Rating Drivers - Strengths

Established market position and strong brand presence in the compressor manufacturing segment:

IRIL has a strong brand presence in the Indian compressor market, with 45–50% share in the centrifugal compressor segment. However, it faces competition from prominent players such as Atlas Copco India Ltd (rated ‘Crisil AAA/Stable/Crisil A1+’), Elgi Equipments Ltd (rated ‘Crisil AA/Stable/Crisil A1+’) and Kirloskar Pneumatic Company Ltd (rated ‘Crisil AA-/Positive/Crisil A1+’).

 

Strong operational and technological support from the parent, IR Inc:

The parent, IR Inc reported revenue of more than $7.6 billion for the year ended December 31. 2025. It holds 75% stake in IRIL (1% directly and 74% via wholly-owned subsidiary - Ingersoll-Rand Industrial US Inc). IR Inc provides mission-critical air, fluid, energy, speciality vehicles and medical technologies; with services and solutions to increase industrial productivity and efficiency. The parent provides requisite technological support to IRIL and procures a part of its global small compressor requirement from India. Exports (sales to affiliates) accounted for around 19% of IRIL’s revenue in fiscal 2025 (21% in fiscal 2024). Furthermore, IRIL meets a part of the input material requirement of its affiliates. Support from IR Inc, via close management interaction and access to a global product portfolio, should continue to support the business risk profile of IRIL.

 

Healthy financial risk profile:

The financial risk profile should remain supported by a debt-free balance sheet. Networth was adequate above Rs 650 crore as on September 30, 2025; however, it has moderated from over Rs 1,100 crore as on March 31, 2018, due to continued material dividend payout over the past few fiscals. With no major capex plans for fiscal 2027, the company plans to procure machinery and tools over the medium term, which will be funded entirely through internal accrual. Total outside liabilities to tangible networth (TOL/TNW) ratio has been around 0.5 time since fiscal 2017, and should sustain over the medium term, backed by IRIL’s conservative financial policy. Debt protection metrics remain strong, with interest coverage and net cash accrual to total ratio of around 275 times and around 4.5 times, respectively, for fiscal 2025 and estimated to be around 191 times and 4.4 times, respectively, for fiscal 2026. IRIL is likely to sustain its strong balance sheet and have greater financial flexibility over the medium term.

Key Rating Drivers - Weaknesses

Exposure to risks related to cyclical demand in the end-user industries and to volatility in raw material prices:

Revenue of IRIL has ranged between Rs 600 crore and Rs 1,300 crore over the past five fiscals (2020–25), amidst intense competitive pressure. In the industrial segment, the company caters to players from capital-intensive sectors such as automotive, metals, pharmaceuticals and textiles. Barring pharmaceuticals, demand from other sectors depends on the macro-economic environment and hence, tends to be cyclical. Vulnerability to cyclicality in the end-user industries and competitive intensity may persist.

 

Furthermore, the operating profitability remains susceptible to fluctuations in foreign exchange rates and prices of raw materials and key components (castings made of pig iron and steel). Material cost formed 54–62% of the operating income over the four fiscals through 2025, reflecting its impact on the cost structure and operating margin. Nevertheless, the operating margin increased to 26% from 13% between fiscals 2018 and 2025, driven by an enhanced product mix, decline in key commodity prices and cost optimisation measures undertaken by the company. For the first nine months of fiscal 2026, the margin stood at around 26%, aided by contribution from the high-margin spares and service segment. 

 

High dividend payouts leading to moderation in liquidity

The company paid dividend of around Rs 212 crore in fiscal 2025, and is likely to maintain this trend over the medium term. It holds a healthy cash surplus and an unutilised fund-based bank limit. Dividend payout is expected to remain high over the medium term, considering growth in operating profitability. Nevertheless, liquidity shall remain healthy.

Liquidity Strong

Liquidity is marked by cash surplus of around Rs 220 crore as on September 30, 2025, and an unutilised fund-based working capital limit. The company remained debt-free as on the same date, and is expected to maintain this status over the medium term. Capex has been funded entirely through internal accrual and is reaching completion. Despite this, and the high dividend payout, expected annual net cash accrual of over Rs 40 crore should suffice to meet incremental working capital expenses and capex requirement over the medium term.

ESG Profile

The environment, social and governance (ESG) profile of IRIL supports its already strong credit risk profile. The industrial machinery and consumables sector has a significant impact on the environment, owing to emissions, waste generation and water consumption. The sector has a social impact due to its nature of operations, affecting the local community and involving health hazards. IRIL has continuously focused on mitigating its environmental and social risks.

 

Key highlights

• Scope 1 and 2 emissions intensity stood at ~1.2 tCO2E per crore of revenue in fiscal 2025, lower vis-a-vis~1.3 tCO2E in fiscal 2024.
• The company has made an attempt to mitigate greenhouse gas emissions through energy conservation measures. For instance, the use of high-volume, low-speed fans has improved efficiency of heating, ventilation and air-conditioning (HVAC), thereby saving 8,000 units per year. Use of variable frequency drives in air-handling units and the replacement of plant compressor with energy-efficient variants has saved 30,000 units per year.
• IRIL’s share of female workforce stood at ~11% female employees and ~2% female workers in fiscal 2025.
• Further, the company has ensured nil lost-time injury frequency rate (LTIFR) and fatalities for its workforce.
• Independent directors constitute nearly 50% of the board and women for 33%. Further, attendance of independent directors in board and committee meetings (86%), and extensive financial disclosures reflect the healthy governance practices followed by the company. 

 

There is growing importance of ESG among investors and lenders. IRIL’s commitment to these principles will play a key role in enhancing stakeholder confidence.

Outlook Stable

IRIL will maintain its established position in the domestic compressor segment over the medium term, with technical and product support from its parent, IR Inc. Operating margin is also expected to remain healthy. The financial risk profile is likely to remain strong, as indicated by the debt-free balance sheet and gradual build-up of liquidity over the medium term, following a prudent dividend philosophy.

Rating sensitivity factors

Upward factors

• Strong double-digit revenue growth of 15–20%, along with healthy operating profitability
• Sustenance of strong balance sheet and material improvement in liquidity

 

Downward factors

• Significant deterioration in operating performance
• Material, debt-funded capex, acquisitions, or sizeable stretch in the working capital cycle, leading to sharp moderation in debt protection metrics; for instance, TOL/TNW ratio exceeding 1.0–1.2 times
• Reduction in cash surplus and further moderation in networth, due to high dividend payout, capital reduction or share buyback

About the Company

Incorporated in 1921, IRIL manufactures air compressors of various capacities for the domestic and overseas markets. The company derives revenue from sale of reciprocating, rotary and centrifugal compressors and spares in the domestic market, and from exports to its parent and affiliates. It has a manufacturing facility in Ahmedabad (Gujarat) and branch offices in most metros across India. It has set up a new plant at Sanand, Gujarat, which should be operational by the end of the first quarter of fiscal 2027.

Key Financial Indicators*

As on/for the period ended March 31		2025	2024
Revenue	Rs crore	1,353	1,154
Adjusted profit after tax (PAT)	Rs crore	268	222
PAT margin	%	19.8	18.3
Adjusted debt/adjusted networth	Times	0.02	0.01
Interest coverage	Times	275.2	193.1

*Crisil Ratings-adjusted numbers

Any other information: Not applicable