News Details

Merino Industries Limited Credit Rating July 2026 Highlights

Merino Industries Limited – Credit Rating Update (July 2026)

Business Performance (FY26)

• Revenue rose to ~Rs 2,544 crore in FY26, up from ~Rs 2,279 crore in FY25 — a healthy year-on-year increase
• One of the largest organised players in India’s laminates industry, backed by a distribution network of nearly 3,000 dealers
• High-pressure laminates (HPL) remain the mainstay, contributing over 70% of turnover
• Growing traction in low-pressure laminates (LPL) and particle boards is expected to support future scale-up
• EBITDA margin improved to ~7.5% in FY26 from 6.9% in FY25, though still below the historical range of 10–12%, due to raw material and input cost pressures

Financial Strength

• Net worth stood strong at over Rs 1,300 crore as of March 31, 2026
• Interest coverage estimated at ~3.56x; net cash accrual to total debt at ~0.26x
• No major debt-funded capex planned, supporting a stable capital structure

Liquidity

• Assessed as Strong
• Bank limits (~Rs 500 crore) utilised at only 73% over the trailing 12 months to March 2026
• Net cash accrual projected at Rs 150–200 crore/year, comfortably covering yearly debt repayment of Rs 30–50 crore
• Over Rs 100 crore held in liquid mutual funds, debentures and bonds as additional liquidity cushion

Key Risks Being Monitored

• Intense competition from organised domestic players (e.g., Greenlam Industries, Century Plyboards) as well as international brands
• Profitability remains sensitive to volatility in key raw material costs (design paper, wood dust, phenol, methanol, melamine), which make up 55–60% of cost of sales
• Large working capital requirement, with gross current assets running at ~130 days over the last three fiscals
• Slower-than-expected ramp-up in the newer particle board/LPL segments, with muted growth in the core HPL business

Outlook: Stable

• MIL is expected to continue benefiting from its strong market position, wide distribution network, and timely execution of new capacity additions

What Could Change the Rating

• Upward: Faster ramp-up and efficiency gains in the particle board/LPL segment, accelerated growth in scale/EBITDA/return on capital employed, and debt-to-EBITDA improving below 2.2x
• Downward: EBITDA margin falling below 5%, weakening interest coverage, or further stretch in the working capital cycle affecting liquidity

Source: Crisil July 03, 2026 Credit Rating