Force Motors Limited - Ratings reaffirmed at 'Crisil AA+/Stable/Crisil A1+': Unlisted, Secured, Redeemable, NCDs Withdrawn

Crisil Ratings has reaffirmed its 'Crisil AA+/Stable/Crisil A1+' ratings on the bank facilities of Force Motors Ltd (FML) and has simultaneously withdrawn its rating on Unlisted, Secured, Redeemable, Non-Convertible Debenture (NCD) of FML, as requested by the company and on receipt of no-dues certificate from the investor and confirmation of payment from the debenture trustee. Crisil Ratings has also withdrawn its rating on the term loan facilities availed by FML of Rs. 613 crores at the request of the company and on receipt of no due certificate from the banker. The withdrawal is in line with the Crisil Ratings policy on withdrawal of ratings.

The rating factors in sustained healthy operating performance of FML, as reflected in moderate increase in overall sales volume driven by light commercial vehicles (LCVs) (excluding tractors). The enhanced product mix drove up realisations and this, along with steady growth in the automotive component business, led to 15% year on year growth in revenue to Rs 8,092 crore in fiscal 2025.

Operating performance is expected to remain strong in the near to medium term, with FML maintaining healthy revenue growth, underpinned by strong demand for its products in the domestic market.. Besides, operating margin also expanded to around 13.8% in fiscal 2025, vis-a-vis 13.2% in the previous fiscal, supported by gains in operating leverage and an improved product mix. Absolute operating profit rose to Rs 1,113 crore, from Rs 926 crore over the same period. Going forward, operating margin is likely to sustain at 13-14%, supported by a healthy product mix, ensuring strong annual cash generation.

Total debt reduced to Rs 17 crore as on March 31, 2025, from Rs 525 crore, a year earlier, on account of scheduled repayments and prepayments. The debt portion included Rs 150 crore in fiscal 2024, availed from its parent, Jaya Hind Industries Pvt Ltd (JHIPL, rated 'Crisil AA+/Stable/Crisil A1+'). Though the loan had no fixed repayment, it was also repaid in fiscal 2025. With negligible debt, gearing improved to 0.01 time as on March 31, 2025, while interest coverage ratio remained healthy at ~44.4 times in fiscal 2025. FML undertook capital expenditure (capex) of over Rs 300 crore in fiscal 2025 and plans to incur capex of Rs 400-500 crore per annum over the medium term. The planned capex is likely to be funded via internal accrual, keeping debt protection metrics healthy. FML is likely to remain debt free over the medium term.

The rating also factors in strong credit risk profile of JHIPL (part of the Dr. Abhay Firodia group) and FML's major shareholder. JHIPL has large marketable securities worth more than Rs 31,000 crore and cash surplus of over Rs 480 crore as on March 31, 2025, which also supports FML's financial flexibility.

The ratings continue to reflect FML's leading position in the domestic LCV passenger segment and presence across multiutility vehicles (MUVs) segment. Healthy market position in the automotive component business with longstanding relationships with reputed original equipment manufacturers (OEMs) lend diversity to revenue streams. The ratings also factor in the company's robust financial risk profile, which is further aided by JHIPL's strong parentage and intent to offer support, if required. These strengths sufficiently offset the susceptibility to cyclicality inherent in the auto industry and niche segments which FML operates in.

Shares of FORCE MOTORS LTD was last trading in BSE at Rs. 17861.10 as compared to the previous close of Rs. 19181.55. The total number of shares traded during the day was 79865 in over 22242 trades.

The stock hit an intraday high of Rs. 19447.10 and intraday low of 16488.00. The net turnover during the day was Rs. 1413005287.00.

Source : Equity Bulls

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FORCEMOTORS INE451A01017 RatingUpdate CRISIL