ICRA reaffirms Sanathan Group’s ratings, positive outlook on capacity expansion

ICRA has reaffirmed Sanathan Group’s long-term and short-term ratings at '[ICRA] A' and '[ICRA] A2+', respectively, while maintaining a ‘positive’ outlook. This reflects ICRA’s expectation of improved revenues and profit margins following the commercialisation of a new plant by the end of Q1 FY2026. With the completion of the expansion project in Sanathan Polyfil Private Ltd (SPPL), the group’s total capacity will double, enhancing its operating profile through a better product mix and strategic location benefits.

The new plant is expected to improve operating margins, aided by reduced freight costs and lower fuel expenses from rice husk usage. However, ICRA highlighted the importance of ramping up operations effectively and profitably. The group’s strong customer and supplier relationships are expected to support steady order inflow and optimal asset utilisation.

The ratings continue to be supported by the group’s leading presence in India’s polyester yarn sector, its experienced promoters, diversified product base, and strong distribution network. However, ICRA flagged risks from industry cyclicality, crude-linked price volatility, forex exposure due to foreign currency debt, and competitive pressures in the fragmented yarn market.

Sanathan Textiles’ current capacity includes 2,00,750 MTPA of polyester yarn, 14,000 MTPA of cotton yarn, and 9,000 MTPA of industrial drawn yarn as of December 31, 2024.