| Lincoln Pharmaceuticals Limited | ||||||
| Ratings reaffirmed at 'CRISIL A/Stable/CRISIL A1' | ||||||
| Rating Action | ||||||
| ||||||
| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its 'CRISIL A/Stable/CRISIL A1' ratings on the bank facilities of Lincoln Pharmaceuticals Ltd (LPL; part of the Lincoln group).
The ratings continue to reflect the extensive experience of the promoters in the pharmaceutical industry, and the established market position and healthy financial risk profile of the group. These strengths are partially offset by working capital-intensive operations, and exposure to regulatory risks, intense competition and extension of sizeable loans and advances to other corporates. |
Analytical Approach For arriving at its ratings, CRISIL Ratings has revised its analytical approach and combined the business and financial risk profiles of LPL and Zullinc Healthcare Ltd (ZHL). Earlier, CRISIL Ratings combined LPL with ZHL and Lincoln Parenteral Pvt Ltd (LPaL; majority holding by LPL). The revision in analytical approach is based on the revised stance of the group’s management that LPL and ZHL, together referred to as the Lincoln group, will be part of the same business, under common management, and have fungible cash flow. LPaL is now merged with LPL.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
mThe promoters’ experience of more than three decades will continue to support the business. Over the years, the promoters have developed understanding of market dynamics and healthy relationships with customers and suppliers. This resulted in improvement in the revenue profile. Revenue increased at compound annual growth rate (CAGR) of 10% in the five fiscals through 2024. The revenue grew 14% on-year to Rs 581 crore in fiscal 2024 and is expected to grow at 7-8% per annum over the medium term. Also, with commercialisation of its Cephalosporin plant in Mehsana and with plans for new product launches in domestic and export markets, along with expansion into newer markets, the business risk profile will strengthen further. Furthermore, the group’s entry in the European market will provide additional fillip to the business risk profile.
Weaknesses:
|
Liquidity: Strong Bank limit utilisation was low at 11.9% for the 13 months through August 2024. Cash accrual, expected over Rs 84 crore per annum, will be sufficient against nil term debt obligation over the medium term. Current ratio was healthy at 4.52 times as on March 31, 2024. The group had unencumbered cash and bank balance of Rs 13.4 crore as on March 31, 2024, with further liquid investment of Rs 138.9 crore in the form of shares and mutual funds. The promoters will likely extend equity and unsecured loans to meet working capital requirement and debt obligation. |
Outlook: Stable CRISIL Ratings believes the Lincoln group will continue to benefit from its established market presence and healthy financial risk profile. |
Rating sensitivity factors Upward factors
Downward factors
|
About the Group LPL was set up in 1979 as a partnership and reconstituted as a public limited company in January 1995. The company is listed on the Bombay Stock Exchange. It manufactures pharmaceutical formulations related to respiratory, genitourinary and musculoskeletal systems, alimentary tract and metabolism, and anti-infectives, among others.
LPaL was incorporated in 1991 and manufactures dry powders, liquid injectables and syrup variants at its facilities in Ahmedabad, Gujarat. The company merged with LPL in fiscal 2023.
ZHL trades in and markets pharmaceutical products. |
Key Financial Indicators - Consolidated
|
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
Annexure - List of Entities Consolidated
| ||||||||||
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||
|
Criteria Details
|