| Madhya Bharat Agro Products Limited | ||||||
| Long-term rating upgraded to 'Crisil A+/Stable'; Short-term rating reaffirmed | ||||||
| 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 upgraded its rating on the long-term bank facilities of Madhya Bharat Agro Products Ltd (MBAPL) to ‘Crisil A+/Stable’ from ‘Crisil A/Stable’ and reaffirmed its ‘Crisil A1’ rating on the short-term bank facilities of the company.
The upgrade reflects improved operating performance in the nine months of fiscal 2026 as reflected in higher-than-expected growth in revenue and profitability. During the nine months of fiscal 2026, revenue increased by 93% on- year to Rs 1,473 crore (Rs 1,066 crore in fiscal 2025 and Rs 824 crore in fiscal 2024) and the earnings before interest, taxes, depreciation and amortisation improved by 70% (on-year) to Rs 185 crore. The improved operating performance is due to healthy sales volume and healthy realisation, supported by healthy demand, the upward revision in the NBS rates in fiscal 2026 and the ability of the company to take price hikes. Moreover, trading volumes also contributed to revenue and profitability growth. The company manufactures only one grade of Nitrogen, Phosphorus and Potassium (NPK; 20:20:0:13) fertiliser along with single super phosphate (SSP). However, healthy NPK demand in the ongoing fiscal resulted in high capacity utilisation (115% in the third quarter of fiscal 2026), along with demand for other grades of NPK fertilisers. This additional demand was met through imports.
While the operating Ebitda improved, the Ebitda margin declined to 13% in the first nine months of fiscal 2026 (14.3% in fiscal 2025 and 12.5% in fiscal 2024) due to trading volumes (contributing around 17% to the revenue) which have low margin.
The operating margin is expected to remain healthy in the medium term for the manufacturing division supported by healthy backward integration and benefits of bulk procurement. The overall margin will continue to depend on the proportionate mix of trading volumes.
The ratings also factor in likely improvement in the market position, with overall granulation capacities currently at ~4.8 lakh MT to reach ~5.7 lakh MT by fiscal 2026 and 12.3 lakh MT by fiscal 2027. The group continues to remain the second-largest SSP player in the industry. Further, with the planned capacity expansion in NPK/DAP (diammonium phosphate) capacities, it will have become a sizeable player in complex fertilisers. The projects have seen substantial progress with debt fully tied up. Timely progress in capital expenditure will remain a key monitorable.
The ratings reflect the healthy business risk profile of the company supported by its established market position in the SSP fertiliser industry, strong linkages with the parent, Ostwal Phoschem India Ltd (OPIL; ‘Crisil A+/Stable/Crisil A1’), and the healthy operating margin of MBAPL aided by backward integration. The financial risk profile remains comfortable, supported by high cash accrual, leading to healthy debt protection metrics and prudent capex funding. These strengths are partially offset by exposure to regulatory risks in the fertiliser industry.
The interest coverage ratio improved to ~5.6 times in fiscal 2025, from ~4.1 times in the previous fiscal. Debt protection metrics are expected to moderate in the near term due to the planned capex of Rs 807 crore (of which Rs 434 crore would be funded via debt) for expansion of fertiliser capacities and matching capacities for intermediates. However, the financial risk profile is expected to remain comfortable, with debt to earnings before interest, tax, depreciation and amortisation ratio likely to sustain below 4 times and interest coverage ratio above 3.5 times over the medium term.
The government has allocated Rs 1.71 lakh crore subsidy budget for fiscal 2027 with Rs 1.17 lakh crore earmarked for urea and Rs 0.54 lakh crore for complex fertilisers. Crisil Ratings estimates the allocation for complex fertilisers may face a shortfall due to the sustained high prices of raw material and imported fertilisers, however track record of timely subsidy disbursement and additional allocation in the past is likely to keep working capital cycle stable. Given that the fertiliser industry remains highly strategic and controlled by the government, any deferment or delay in disbursing subsidy or any change in the regulatory scenario would be a key rating sensitivity factor. |
Analytical Approach Crisil Ratings has applied its parent notch-up framework to factor in the strong linkages between MBAPL and Ostwal Phoschem India Ltd (OPIL). |
Key Rating Drivers - Strengths Established market position in the SSP industry with diversification into DAP/NPK MBAPL is an established player in the SSP industry with OPIL (on a consolidated level including MBAPL) being the second-largest manufacturer of SSP with market share of ~9% in fiscal 2025. Its products are sold under the well-known Annadata brand. The group has an established distribution network comprising 2,500 wholesalers and dealers and 30,000 retailers. Additionally, it witnessed high production ramp up for DAP/NPK capacities in the first nine months ended fiscal 2026. Furthermore, the company has a marketing agreement with National Fertilisers Ltd to increase its distribution reach. MBAPL is likely to maintain its healthy market position, backed by the established position of OPIL in the SSP industry and the focus on import substitution for DAP/NPK.
Strong linkages with OPIL and experienced promoters The promoter group and OPIL hold ~74.6% stake in MBAPL, which is one of the main operating companies of the group--with ~35% contribution to revenue in fiscal 2025. It benefits from common sourcing of raw materials for the group. Furthermore, OPIL has extended a corporate guarantee and the promoters have extended a personal guarantee to the debt facilities of MBAPL. The group has common directors, having decades of experience in the fertiliser industry.
Strong operating profitability due to backward integration OPIL has maintained a relatively higher operating margin than peers, driven by strong backward integration for raw materials undertaken by the Ostwal group with captive capacity for sulfuric acid, rock phosphate beneficiation and phosphoric acid. The group also has long-term supply agreement for procurement of rock phosphate with Jordan Phosphate Mines Company for import and Rajasthan mining companies for indigenous supply. This ensures continuous availability and lower cost of production. |
Key Rating Drivers - Weaknesses Moderation in debt protection metrics owing to debt-funded capacity expansion The company has planned capex of Rs 807 crore during fiscal 2027, towards expansion of DAP/NPK capacities by 4.2 lakh tonne per annum (TPA), SSP by 3.3 lakh TPA and matching phosphoric acid and sulfuric acid capacities. The management plans to fund the capex through debt of Rs 434 crore and internal cash accrual. . The new capacity is expected to be commercialised in phases till October 2026 and hence will lead to moderation in debt protection metrics in the near term. Further, under MBAPL, the group is in initial stage of assessing adding additional 3.3 lakh tons of DAP/NPK capacity with an estimated capex of Rs 450 crore. Any project cost or time overruns, impacting the financial risk profile, will remain monitorable.
Exposure to regulatory risks in the fertiliser industry Given the government’s thrust on self-sufficiency in food grain production, the fertiliser industry is strategic but highly controlled. Hence, players are susceptible to regulatory changes. Fertiliser players are susceptible to delays in subsidies from the government, leading to higher reliance on working capital loans. Any deferment in the disbursement of subsidies on account of under-budgeting and any change in the regulatory scenario remain key rating sensitivity factors. |
Liquidity Strong Cash and equivalent stood at Rs 3.91 crore as on December 31, 2025. The sanctioned fund-based limit was utilised at about 41% during the 12 months through December 2025. Crisil estimates cash accruals at Rs 170-220 crore per annum for fiscals 2027 and 2028, sufficient to cover annual repayment of Rs 15-60 crore. The company has planned a capex of Rs 807 crore during fiscal 2027, of which Rs 434 crore will be funded through debt and the rest via cash accrual. Liquidity is also supported by articulation of need-based support from the Ostwal group. |
Outlook Stable The business risk profile of MBAPL will sustain over the medium term, driven by healthy market position in SSP, ramp up in DAP/NPK capacity and strong operating efficiency. The financial risk profile will remain stable, led by healthy cash accrual and strong linkages with the Ostwal group. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company MBAPL was incorporated in 1997 and taken over by the Ostwal group in 2004. It was listed on the small and medium enterprises platform of National Stock Exchange in 2016 and then shifted to the main platform in 2019. It manufactures SSP, DAP and NPK fertilisers. It has two plants in Sagar, Madhya Pradesh, with installed capacity of 2.4 lakh TPA of SSP, 1.65 lakh TPA of sulfuric acid, 69,000 TPA of phosphoric acid, 1.89 lakh TPA of beneficiated rock phosphate crushing and 2.4 lakh TPA of DAP/NPK.
During the nine months ended December 31, 2025, the profit after tax (PAT) was Rs 90.4 crore and operating income was Rs 1,472 crore, against Rs 43 crore and Rs 762 crore, respectively, in the corresponding period of fiscal 2025. |
Key Financial Indicators*
*As per analytical adjustments made by Crisil Ratings |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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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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