Credit Rating Action

Tega Industries Credit Rating Downgraded by CRISIL Following Molycop Acquisition Leverage Concerns

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BSE

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Tega Industries Limited informed exchanges that CRISIL Ratings has downgraded the company’s long-term and short-term bank facility ratings due to expected moderation in financial risk profile after the proposed acquisition of Molycop Group. However, the rating outlook remains Stable considering the strengthened global business profile post acquisition.

PRICE-SENSITIVE TRIGGER

Event: CRISIL downgraded Tega Industries’ credit ratings

Type: Credit Rating Action

Impact: Negative

Immediate Effect: The downgrade reflects higher leverage and debt burden expected after the completion of the Molycop acquisition, though the company retains a Stable outlook due to strong business fundamentals and global diversification.

Key Metrics:

Total Bank Loan Facilities Rated: ₹2,000 crore
Long-Term Rating: Downgraded to CRISIL A+/Stable from CRISIL AA-
Short-Term Rating: Downgraded to CRISIL A1 from CRISIL A1+
Acquisition Enterprise Value: Approx. ₹13,325 crore
Equity Raised for Acquisition: ₹1,713 crore
Long-Term Debt Raised: ₹1,500 crore
Expected Consolidated Debt/EBITDA FY27: 4.0x – 4.5x
FY25 Operating Income: ₹1,639 crore
FY25 PAT: ₹200 crore

Highlight Metric:

Expected Peak Debt/EBITDA
4.0x – 4.5x in FY27

What Happened ?

Tega Industries announced that CRISIL Ratings has revised and downgraded its bank facility ratings after reviewing the company’s upcoming acquisition of global mining consumables company Molycop. The ratings were also removed from “Rating Watch with Developing Implications” and assigned a Stable outlook.

CRISIL stated that while the acquisition significantly strengthens Tega’s global business positioning, product basket, and geographical diversification, it will also substantially increase leverage levels in the near term due to debt-funded acquisition financing.

Key Details

Tega is acquiring Molycop at an enterprise value of approximately ₹13,325 crore.
The acquisition is expected to close by June 2026 after pending approval from Mexico.
Post acquisition, Tega will become one of the world’s largest players in mining consumables.
Molycop’s grinding media business complements Tega’s existing mining solutions portfolio.
The acquisition improves exposure to markets such as the US and Australia.
Combined annual revenue is expected to exceed ₹17,000 crore.
Operating margins are expected to remain healthy at 13–15% over the medium term.

Additional Note:

CRISIL highlighted that synergy realization, debt reduction, and margin sustainability over the next 12–18 months will remain key monitorable factors.

Risk Analysis

Key Risks:

Consolidated debt may rise to ₹9,700–₹9,800 crore in FY27.
Debt/EBITDA is expected to peak at 4.0x–4.5x.
Large working capital requirements remain due to global operations.
Integration and synergy execution risks from Molycop acquisition.
Dependence on successful deleveraging through internal accruals, asset monetisation, and possible future equity raising.

Worst Case Scenario:

If operating synergies are delayed or profitability weakens, leverage metrics may remain elevated for longer than expected, potentially putting further pressure on credit ratings.

Risk Level: Medium

Company Commentary

Tega aims to reduce consolidated debt over the next 18–20 months.
The company plans to improve cash generation through operational synergies and cost optimisation.
The acquisition is expected to create a globally diversified mining consumables platform.
Tega expects stronger cross-selling opportunities and deeper penetration into international mining markets.
CRISIL maintained a Stable outlook due to expected strengthening of the combined entity’s business profile.

Official Exchange Filing: Tega Industries Limited