| Lincoln Pharmaceuticals Limited | ||||||
| Ratings reaffirmed at 'Crisil A / Stable / Crisil A1 ' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed rationale Crisil Ratings has reaffirmed its 'Crisil A/Stable/Crisil A1' ratings on the bank facilities of Lincoln Pharmaceuticals Ltd (LPL; part of the Lincoln group).
The ratings continue to reflect the extensive experience of the promoters in the pharmaceutical industry, and the established market position and healthy financial risk profile of the group. These strengths are partially offset by working capital-intensive operations, and exposure to regulatory risks, intense competition and extension of sizeable loans and advances to other corporates. |
Analytical approach For arriving at its ratings, Crisil Ratings has revised its analytical approach and combined the business and financial risk profiles of LPL and Zullinc Healthcare Ltd (ZHL), together referred to as the Lincoln group, because these entities are part of the same business, under common management and have fungible cash flow.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key rating drivers - Strengths Established market position supported by the extensive experience of the promoters The business risk profile of the group is underpinned by its established market position, widespread geographical reach, and healthy clientele and product base. It is an established player in the pharmaceutical industry with 1,700 registered products across more than 15 therapeutic segments and derives 60-65% revenue through exports.
The promoters’ experience of more than three decades will continue to support the business. Over the years, the promoters have developed a strong understanding of market dynamics and healthy relationships with customers and suppliers. This resulted in improvement in the revenue profile. Revenue increased at compound annual growth rate (CAGR) of 10% in the five fiscals through 2024. Revenue grew 14% on-year to Rs 623 crore in fiscal 2025 and is expected to grow 7-8% per annum over the medium term. Also, with plans for new product launches in domestic and overseas markets, and expansion into newer markets, the business risk profile is expected to strengthen further. The group’s entry in the European market will support the business risk profile.
Healthy financial risk profile At the group level, the financial risk profile is robust, backed by moderate networth, gearing and debt protection metrics. Consolidated networth was Rs 671 crore against nil debt as on March 31, 2025, aided by profit accretion apart from a few instances of capital raising. The debt protection metrics were comfortable, as reflected in interest coverage ratio of 91.01 times in fiscal 2025. In the absence of debt-funded capital expenditure (capex), the financial risk profile is likely to improve over the medium term. |
Key rating drivers - Weaknesses Working capital-intensive operations: Gross current assets are expected to be sizeable at 170-185 days over the medium term, driven by receivables and inventory of 100-105 days and 55-60 days, respectively. Receivables were range-bound at 30-60 days for domestic sales, 60-90 days for exports and up to 120 days for sales backed by letter of credit. The company receives supplier credit of 90-120 days owing to its reputation and longstanding relationships. With growth in business over the medium term, efficient working capital management leading to improvement in return on capital employed will be monitorable.
Exposure to regulatory risks and intense competition Susceptibility to regulatory changes for pharmaceutical formulations and intense competition persists. The group has to comply with stringent quality and pricing norms on continuous basis. Also, with an increasing export base, the regulatory requirements of a larger number of countries need to be met.
Sizeable loans and advances: The group has extended loans and advances of Rs 141 crore as on March 31, 2025, as against Rs 104 crore as on March 31, 2024, to affiliates and individuals. An increase in investments or further exposure may impact liquidity and will be monitorable. |
Liquidity Strong Bank limit utilisation was low at 4-5% on average for the 12 months through November 2025. Cash accrual is expected to be over Rs 90 crore against nil debt obligation, and the surplus will cushion the liquidity of the company. The current ratio was healthy at 4.33 times as on March 31, 2025. Moderate cash and bank balance was around Rs 22.4 crore as on March 31, 2025. Liquid investments were Rs 173.1 crore in shares, debentures and mutual funds as on March 31, 2025. Low gearing and moderate networth support financial flexibility and provides the financial cushion available in case of any adverse conditions or downturn in the business. |
Outlook Stable Crisil Ratings believes the Lincoln group will continue to benefit from its established market presence and healthy financial risk profile. |
Rating sensitivity factors Upward factors
Downward factors
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About the company LPL was set up in 1979 as a partnership and reconstituted as a public limited company in January 1995. The company is listed on the Bombay Stock Exchange. It manufactures pharmaceutical formulations related to respiratory, genitourinary and musculoskeletal systems, alimentary tract and metabolism, and anti-infectives, among others.
LPL was incorporated in 1991 and manufactures dry powders, liquid injectables and syrup variants at its facilities in Ahmedabad, Gujarat. The company merged with LPL in fiscal 2023.
ZHL trades in and markets pharmaceutical products. |
Key financial indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||
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Criteria Details
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