The credit ratings agency said that the ratings reflect ICL's established market position along with backward integration and improving operating performance.

These strengths are partially offset by average operating efficiency in the past, leveraged-though-improving capital structure and significant exposure to related parties.

The ratings also factor in the company's inherent susceptibility to volatility in input costs and realisations, as well as cyclicality in the cement industry.

ICL is an established cement company, particularly in South India, which has been operating for over seven decades. Its brands, such as Coromandel, Sankar and Raasi, are well established and command premium.

CRISIL said that the company's financial risk profile is expected to improve with heathy cash accrual, deleveraging and no major capital expenditure (capex) plans. ICL has already reduced debt by about Rs 550 crore in fiscal 2021 and further plans to repay debt of Rs 600-650 crore in fiscal 2022.

ICL's volume declined 38% in the first half of fiscal 2021, resulting from disruptions caused by the pandemic and subsequent economic slowdown. However, strong demand rebound in the second half of fiscal 2021 restricted overall volume decline to around 20% for the fiscal.

“Our base case assumes double digit volume growth for ICL in fiscal 2022, mainly driven by low base of fiscal 2021, coupled with demand from housing and infrastructure segments, and waning impact of the second wave of the Covid-19 pandemic over the next few months. However, demand could be lower if localised lockdowns and other restrictions persist,” the credit ratings agency said.

India Cements is primarily engaged in manufacture and marketing of cement and cement related products. It had installed capacity of 15.55 MTPA as on 31 March 2021, spread across 10 different manufacturing units in Tamil Nadu, Andhra Pradesh, Telangana, Maharashtra and Rajasthan.

On a consolidated basis, the cement maker reported a net profit of Rs 50.19 crore in Q4 FY21 as against net loss of Rs 10.40 crore in Q4 FY20. Revenue from operations increased 6.9% year-on-year (YoY) to Rs 1,472.45 crore during the quarter.

The scrip rose 1.26% to currently trade at Rs 196.20 on the BSE.