Credit Rating Action
Gujarat Themis Biosyn Credit Rating Placed on Negative Watch Amid Large Acquisition Plans
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- Gujarat Themis Biosyn Limited informed the stock exchanges that CARE Ratings has placed its long-term and short-term bank facility ratings on Rating Watch with Negative Implications (RWN).
- The rating action follows the company’s proposed acquisitions of MicroBiopharm Japan and Sanofi’s anti-tuberculosis and anti-infective brands, while the company has simultaneously issued a formal representation disagreeing with the rating assessment.
PRICE-SENSITIVE TRIGGER
Event: CARE Ratings places bank facilities on Rating Watch with Negative Implications
Type: Credit Rating
Impact: Negative
Immediate Effect: CARE Ratings maintained Gujarat Themis Biosyn’s investment-grade ratings but placed them on Rating Watch with Negative Implications, citing uncertainty surrounding the funding structure of the company’s proposed acquisitions and the potential impact on its financial risk profile.Â
financials:
Financial Metrics:
- Revenue (FY26): ₹167.23 crore (vs ₹152.29 crore in FY25 | +9.8% YoY)
- PBILDT: ₹76.94 crore (vs ₹70.33 crore in FY25)
- PAT: ₹46.68 crore (vs ₹48.77 crore in FY25)
- PBILDT Margin:Â 46.01%Â (FY25: 46.18%)
- PAT Margin:Â 27.91%Â (FY25: 32.03%)
- Overall Gearing: 0.56x (FY25: 0.12x)
- Interest Coverage: 26.09x (FY25: 193.27x)
- Operating Cash Flow: ₹67.33 crore (FY25: ₹31.63 crore)
Margins:
- Operating profitability remained strong with PBILDT margins around 46% despite higher employee, depreciation and finance costs.
- PAT margin moderated due to increased depreciation following recent capital expenditure and higher borrowing costs.
Highlight:
- CARE placed GTBL’s ratings on Rating Watch with Negative Implications primarily due to acquisition-related funding uncertainty rather than deterioration in current operating performance.Â
What Happened ?
CARE Ratings placed Gujarat Themis Biosyn’s CARE BBB long-term bank facilities and CARE A3+ short-term bank facilities on Rating Watch with Negative Implications after evaluating the company’s planned acquisitions.
The rating agency highlighted two significant proposed transactions:
- Acquisition of 100% equity of MicroBiopharm Japan Co., Ltd. for approximately ₹1,300 crore.
- Acquisition of Sanofi’s anti-tuberculosis and anti-infective brand portfolio and trademark rights for approximately ₹1,700 crore.
CARE stated that these acquisitions, whose combined value significantly exceeds the company’s tangible net worth, introduce uncertainty regarding funding structure, leverage and future financial risk.Â
key details
Acquisition Plans:
- Proposed acquisition of MicroBiopharm Japan through wholly owned subsidiary Themis Biosyn Japan Limited.
- Proposed purchase of Sanofi’s anti-TB and anti-infective product portfolio.
- Combined acquisition value exceeds ₹3,000 crore.
- Management plans to raise ₹1,000 crore through Qualified Institutional Placement (QIP) to support funding.
- Both transactions remain subject to regulatory approvals and final financing arrangements.Â
CARE’s Key Observations:
- Acquisition funding structure remains uncertain.
- Large transaction size may materially alter leverage.
- Funding execution remains a key monitorable.
- Future rating action will depend on clarity regarding financing and overall financial risk profile.Â
Business Strengths Highlighted by CARE:
- Experienced promoter and management team.
- Strong niche positioning in Rifamycin intermediates.
- Healthy profitability profile.
- Comfortable capital structure.
- CGMP-approved manufacturing facilities.
- Near completion of expansion projects.
Operational Developments:
- API manufacturing expansion has commenced trial production.
- Fermentation capacity expanded from 216 MT to 432 MT.
- Hybrid renewable power project (18 MW) is expected to become operational from August 2026.
- Customer diversification initiatives helped offset lower business from a major customer during FY26.Â
Note:
- CARE indicated that future rating actions will depend on successful execution of acquisitions, funding arrangements and stabilization of recently commissioned expansion projects.
Risk Analysis
Summary:
- The primary concern is execution risk associated with large acquisitions and the resulting impact on leverage, liquidity and overall credit profile.
Key Risks:
- Funding uncertainty for acquisitions exceeding ₹3,000 crore.
- Potential increase in leverage following acquisition completion.
- Timely execution of ₹1,000 crore QIP.
- Stabilization of newly commissioned API and fermentation facilities.
- Working capital-intensive operations.
- Customer concentration and competitive pharmaceutical industry dynamics.
- Exposure to raw material price volatility.Â
Worst Case:
- Failure to secure funding as planned or significant deterioration in leverage after acquisitions could result in a downgrade of the company’s credit ratings.
Risk Level: High
Company Commentary
The company strongly disagreed with CARE Ratings’ assessment and submitted a formal representation to the rating agency.
- Management believes the rating decision is overly conservative and does not adequately reflect available liquidity buffers.
- The company stated that its ongoing ₹1,000 crore QIP fundraising roadmap significantly mitigates funding risk.
- Management argued that the proposed acquisitions will contribute meaningful revenue and EBITDA, making current leverage assessment overly backward-looking.
- Gujarat Themis requested that CARE publish its dissent and operational counterarguments alongside the rating rationale.
- The company reserved the right to share its representation directly with lenders, investors and debenture trustees to ensure transparency.
Official Exchange Filing: Gujarat Themis Biosyn Limited
