| Solara Active Pharma Sciences Limited | ||||||
| Ratings reaffirmed at 'Crisil BBB / Stable / Crisil A3+ ' | ||||||
| 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 ratings on the bank facilities of Solara Active Pharma Sciences Ltd (Solara) at ‘Crisil BBB/Stable/Crisil A3+’. Further, it has withdrawn its rating on Rs 692.8 crores proposed facility upon receipt of request from the client in line with Crisil Ratings policy of withdrawal of rating.
Crisil Ratings has noted that the company's business performance, following a strong full-year performance in fiscal 2025 and a robust first-quarter performance in fiscal 2026, has moderated in the second and third quarters of fiscal 2026. The operating margin has been impacted by an unscheduled shutdown of 3-4 weeks of the Mangaluru plant (Karnataka) during the second quarter. However, the plant has received the United States Food and Drug Administration (USFDA) audit clearance with only two minimal observations, which is expected to support the business profile over the medium term. In the third quarter of fiscal 2026, the margin moderation continued owing to negative margin in the Ibuprofen business, which constitutes 25-30% of the company's revenue. The Ibuprofen active pharmaceutical ingredient (API) business reported revenue of around Rs 249 crore, with a negative margin of approximately 23% for the first nine months of fiscal 2026, due to intense price competition. Conversely, the company's growth in the growth API business was strong, with revenue of Rs 734 crore and operating margin of around 26% for the first nine months of fiscal 2026, driven by a greater focus on this segment. Consequently, the company reported revenue of Rs 981 crore with operating margin of 13.15% for the first nine months of fiscal 2026.
The financial risk profile has improved significantly, following the rights issue of approximately Rs 315 crore raised through application money and the first call in June 2024 and April 2025, respectively. This led to substantial reduction in external debt, with total debt standing at around Rs 630 crore as of December 2025, compared to Rs 999 crore as of March 2024. Furthermore, the company is expected to raise the final call money of around Rs 135 crore during April and May of this year, which will be primarily utilised for debt reduction. This is expected to further strengthen the financial risk profile, which remains a key monitorable.
Additionally, recognising the structural challenges in the commodity Ibuprofen API business, the company's board is engaging with strategic advisors to evaluate options for this business. A roadmap is expected to be presented with the company's fourth-quarter fiscal 2026 results. Crisil Ratings will closely monitor developments and assess their impact on the credit profile of the company |
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 Established market position in key APIs, along with strong customer and supplier relationships: Solara has a strong portfolio of APIs in key therapeutic segments, with expertise in anthelmintic, anti-malaria, anti-infective and non-steroidal anti-inflammatory. Furthermore, it has been increasing its focus on the non-steroidal anti-inflammatory segment by adding capacity and working on other therapeutic segments. Solara has a diversified customer base, with more exposure to regulated markets. Its longstanding presence in the industry has helped Solara build healthy relationships with customers and suppliers.
Moderate financial risk profile, indicated by strong networth and comfortable gearing The financial risk profile has been moderate, with gearing less than 1 time as on December 31, 2025. Adjusted networth improved to around Rs 703 crore, from Rs 528 crore as of March 31, 2024, due to debt reduction and equity infusion over the past year. Consequently, debt protection metrics have shown a notable improvement, with interest coverage ratio of 1.81 times and net cash accrual to total debt ratio of 0.12 time for fiscal 2025, against -0.89 time and -0.46 time in fiscal 2024. For the first nine months of fiscal 2026, the interest coverage ratio was around 1.94 times, which is lower than expected due to the lower margin. However, the metrics may improve further with reduction in debt and enhancement in profitability, which remains a monitorable. |
Key Rating Drivers - Weaknesses Exposure to risks relating to strict regulations: Most of the products manufactured by Solara face increased inspections and regulatory actions by authorities, such as the USFDA. Additionally, production of a few products involves waste discharge, which needs to be treated in effluent treatment plants (ETPs). Thus, Solara needs to invest continuously to upgrade ETPs and bring efficiency in the process to reduce waste discharge.
Volatility in operating profitability: Operating profitability has fluctuated between -7.3% and 16.2% over the three fiscals through March 2025. This trend has also persisted in the first nine months of fiscal 2026 due to the price war in the Ibuprofen API segment and an unscheduled plant shutdown in the second quarter. However, the company is focusing on scaling up its API business, which has higher margin and is also undertaking measures for cost optimisation and reduction. Thus, the operating margin should improve over the medium term and remains a key sensitivity factor. |
Liquidity Adequate Bank limit utilisation remained at 94.9% for the 12 months through December 2025. This is primarily due to the reduction of the overall working capital limit as the company was focused on debt reduction. Cash accrual is expected at Rs 120-130 crore per annum, against yearly debt obligation of Rs 45-60 crore over the medium term. The promoters are likely to extend need-based funds (equity and unsecured loans) to aid operations. |
Outlook Stable Crisil Ratings believes Solara will continue to benefit over the medium term from the management’s extensive experience. |
Rating sensitivity factors Upward Factors:
Downward Factors:
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About the Company Established in October 2017, Solara was formed through the demerger of the API business of Strides Shasun Ltd (currently named Strides Pharma Sciences Ltd). Solara acquired the human API business from Sequent Scientific Ltd during the same time, and hence, is a pure play API company. The company is listed on the Bombay Stock Exchange and National Stock Exchange. |
Key Financial Indicators Consolidated Numbers
Crisil Ratings-Adjusted Numbers |
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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Annexure: List of instruments and names of regulators of the instruments As required by SEBI CRA Circular dated Feb 10, 2026, a list of activities or instruments falling under the purview of various FSRs, along with the names of respective FSRs, is being disclosed below:
* Includes securitisation transactions involving assignee payout, acquirer's payout. ~ The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), Crisil Ratings Limited shall separately capture the rated quantum details along with names of respective regulators. ^ Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. @ These ratings were assigned during regulatory regime prior to introduction of SEBI CRA Circular dated Feb 10, 2026 and the investor side regulators have accordingly been included.
Note: Kindly note that for activities or instruments falling under the purview of FSRs other than SEBI, the grievance/dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
Criteria Details
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