Carraro India, a Tier-I solution provider in transmission and driveline, has got a major boost to its financial credibility and market standing as India Ratings and Research (a Fitch Group company) has upgraded its long-term credit facilities to ‘IND A+’ with a Stable Outlook from ‘IND A’ with a Positive Outlook.
This upgrade is on account of Carraro India’s continued focus on operational efficiency, financial discipline and its ability to withstand the volatile economic environment. The company also received an upgraded rating of IND A+ with Stable Outlook on its fund-based Working Capital Limits, previously rated at IND A/Positive. The non-fund based Working Capital Limits retained their IND A1 short-term rating, reaffirming strong short-term liquidity and financial management.
Key Rating Actions
| Credit Facility | Credit Amount (INR Cr) | FY 2024-25 Rating | FY 2025-26 Rating | Action |
|---|---|---|---|---|
| Long-Term Credit Facility | 129.21 (reduced from 180.44) | IND A / Positive | IND A+ / Stable | Upgraded |
| Proposed Term Facility (Unallocated) | 44.79 | – | IND A+ / Stable | Assigned |
| Fund Based WCL | 149 | IND A / Positive | IND A+ / Stable | Upgraded |
| Non-Fund Based WCL | 58 | IND A1 | IND A1 | Affirmed |
Strategic Commentary
Dr. Balaji Gopalan, Managing Director of Carraro India Limited, stated:
“We welcome the upgrade of Carraro India Limited’s long-term and short-term credit ratings to ‘IND A+’ with a Stable Outlook by India Ratings & Research. This upgrade is a testament to the company’s robust financial health and strong creditworthiness. It reflects a clear endorsement of our continued commitment to operational excellence and cost efficiency.”
Dr. Gopalan attributed the upgrade to improved EBITDA margins, better working capital management and overall strengthening of credit profile. He also mentioned the strategic advantage gained through the acquisition of Carraro Technologies India which has reduced royalty payments and improved operational cash flows.
Business Outlook & Financial Flexibility
The upgraded ratings are expected to enhance Carraro India’s financial flexibility by enabling access to cheaper borrowing options. As the company prepares to enter FY 2025-26, it is targeting double-digit sales growth, supported by:
- Increased investments in domestic sourcing
- A growing portfolio of value-added solutions
- Sustained technology-led product differentiation
With positive rural demand indicators, particularly after two consecutive healthy monsoon forecasts, Carraro India is optimistic about further traction in its 4WD product line and a rebound in the export segment, particularly with innovations like tele-boom handlers.
Carraro India Post-IPO Performance
Carraro India launched its IPO on 20 December 2024, with an issue size of INR 1,250 crore. The issue was a complete OFS and subscribed 1.1X. However, it was listed in red zone with a loss of 9.63%. Notably, the stock tanked ~59% from its IPO allotment price of INR 704 per share. Currently, trading around INR 296 per share. However, the improved credit rating may help restore investor confidence over the longer term.
About Carraro India
Founded in 1997 Carraro India is an engineering company catering to Original Equipment Manufacturers (OEMs) with advanced axles, transmission systems, gears and components. With in-house design and manufacturing capabilities and two manufacturing plants in Pune the company is part of the global Carraro Group.
Its technologies serve agricultural, construction and off-highway equipment sectors, manufacturing critical components like gears, shafts and ring gears. The company has a strong R&D setup with proprietary IP and has a supply chain of over 220 suppliers in India and 58 international partners.
Cautionary Statement
Carraro India has issued a Safe Harbor disclaimer stating that forward looking statements are based on current estimates and expectations. Results may vary due to risks and uncertainties.
