Rationale

 The ratings reaffirmation of Patton International Limited (PIL) factors in its comfortable financial risk profile in FY2025 and FY2026, characterised by conservative capital structure and strong debt coverage indicators. While the company reported a healthy performance in FY2025 with the operating revenues increasing to Rs. 780 crore from Rs. 721 crore in FY2024 on the back of robust export demand, the sales volumes are expected to moderate by 7-8% in FY2026, compressing the turnover to an extent. In 9M FY2026, the company reported revenues of Rs. 535 crore, down ~7% over 9M FY2025, owing to tariff‑related uncertainties after the US increased the import levy on steel products to 50% from 25% with effect from June 4, 2025. Exports accounted for around 91% of PIL’s revenues in FY2025, with majority of the sales concentrated in the US market. Nevertheless, the operating margins are expected to remain comfortable in FY2026, reflecting the ability of the entity to pass on the tariff impact, resulting in comfortable OPBDITA and strong cash flow from operations. The liquidity continues to be comfortable, supported by low debt levels and adequate buffer in working capital limits, with an average utilisation of 30–35% in the last 12 months ended in February 2026. The ratings continue to factor in the established track record of PIL in the export market for the supply of conduit fittings and a longstanding reputed clientele, reflecting the credibility of its products. ICRA notes that the entry barriers in this business remain high because of stringent quality norms requiring certification. The offtake risk for the company remains low as a major part of the production of conduit fittings is order-backed. The ratings continue to derive comfort from PIL’s healthy margins, a conservative capital structure and strong debt protection metrics, which are likely to continue going forward. The ratings also favourably consider PIL’s market position in the plastic water tank manufacturing business in West Bengal, although its contribution to the top line has been below 10% over the past years. While PIL remains exposed to fluctuations in foreign currency rates, its practice of entering into forward contracts to partially hedge against any adverse currency movement mitigates such risk to some extent. The ratings, however, continue to be constrained by the company’s high working capital intensity owing to a stretched receivable position, and significant client concentration risk with around 90% of the export business derived from the top 10 clients. Further, any consistent unfavourable operating environment in the US, its target market, and/or increased competition, which could affect PIL’s top line and result in a material decline in the cash accruals from the business, would remain a key rating sensitivity, going forward. The Stable outlook on the long-term rating reflects ICRA’s expectations that PIL would continue to maintain a conservative capital structure and an adequate liquidity position, thus supporting its credit profile.