The agency has upgraded its rating on the long-term facilities to “[ICRA] A (Stable)” from “[ICRA] A-“. It has also revised the short-term rating to “[ICRA] A1” from “[ICRA] A2+”.

ICRA stated that the upgrade in Tanfac Industries Limited’s (TIL) ratings reflects the demonstrated improvement in its operational and financial risk profiles in the recent past and expectations of this trend to sustain going forward, driven by improvement in the volumes and realisations of hydrofluoric acid and the strong operational linkages with Anupam Rasayan India Limited (ARIL),leading to higher offtake of TIL’s products.

The company’s financial profile has strengthened over the years with healthy profitability, steady annual cash accruals from business operations and limited dependence on debt. The capital structure is strong owing to its debt-free status and the debt coverage indicators remain healthy. The operating profitability, though moderated from FY2022 levels, remained healthy in FY2023 and H1FY2024,aided by TIL’s ability to pass on the volatile raw material prices to the end consumers.

The ratings are, however, constrained by TIL’s limited pricing flexibility in a highly competitive market and the vulnerability to the volatility in spread between global products and raw material prices. The demand cyclicality in end-user industries, besides the forex rate volatility and adverse changes in custom duties and environmental policies, also remain credit concerns.

The Stable outlook on TIL’s rating reflects ICRA’s opinion that the company will continue to benefit from its established position as a fluorochemical manufacturer and will continue to benefit from the synergies with ARIL.

Tanfac Industries (TIL) is a joint venture (JV) between Tamil Nadu Industrial Development Corporation (TIDCO) and Anupam Rasayan India Limited (ARIL); the management control vests with ARIL. The company mainly produces hydrofluoric acid (HF) and aluminium fluoride (ALF). TIL also produces sulphuric acid. In addition, it manufactures specialty fluorides that are sold to diverse customers.

The scrip had gained 1.48% to end at Rs 2324.70 on the BSE on Saturday.