Rashtriya Chemicals and Fertilizers Ltd

RCF's Strategic Capex & Efficiency Gains 🌱📈

- India Ratings and Research affirmed Rashtriya Chemicals and Fertilizers Limited's (RCF) Non-Convertible Debentures (NCDs) rating at 'IND AA' with a Stable outlook.

- The affirmed NCDs have a total rated amount of INR 12,000 crore, reduced from INR 17,000 crore previously.

- RCF is a Government of India undertaking with 75% ownership, highlighting strong sovereign support and strategic importance.

- Key strengths include RCF's strong market position in fertilizers (7-8% urea market share), operational efficiency (Thal plant at 5.87 Gcal/tonne vs. normative 6.2 Gcal/tonne), and diversified product mix (62% revenue from manufactured fertilizers in 9MFY26).

- RCF plans significant capital expenditure of INR 23 billion over FY27-FY29 for energy efficiency improvements and NPK capacity expansion, funded by internal accruals and debt.

- The company has equity commitments of INR 10.67 billion for joint venture Talcher Fertilizers Limited (TFL), with total commitments reaching INR 21.69 billion.

- RCF faces challenges from exposure to subsidy policies, raw material price fluctuations, and elevated working capital needs (subsidy receivables at INR 29.54 billion as of 9MFY26).

- Liquidity is adequate with cash balances of INR 2.03 billion as of 9MFY26, though dependent on timely subsidy receipts from the government.

- Negative rating factors include potential deterioration in credit metrics if net adjusted leverage exceeds 2.5x or sovereign support weakens.