Dhampur Sugar Mills’ outlook revised to negative amid weaker financial metrics

India Ratings and Research has revised the outlook on Dhampur Sugar Mills Limited's (DSML) bank loan facilities to Negative from Stable, while affirming the rating at 'IND AA-'. This revision, effective November 14, 2025, reflects the likely weaker-than-expected credit profile of DSML over the near term, attributed to reduced EBITDA and increased debt levels. The company's EBITDA fell 35% year-over-year to INR1,695m in FY25, down from INR2,663m in FY24, primarily due to lower cane crushing, reduced sugar recovery, and decreased ethanol sales.

Despite improved sugar prices and a projected rebound in crushing, which partially offsets the impact of increased State Advised Price (SAP) for sugarcane, DSML’s credit metrics have been affected. Net leverage (net debt/operating EBITDA) rose to 4.5x in FY25 from 3.4x in FY24, exceeding Ind-Ra's expectations. Interest coverage also declined to 3.4x in FY25 from 6.3x in FY24. The company's liquidity remains adequate, supported by inventory unwinding and available working capital lines, but the pace of deleveraging hinges on EBITDA recovery and inventory management.

DSML's ethanol segment experienced a sharp EBITDA decline of 75% year-over-year to INR350m in FY25, due to reduced sales and unchanged prices amidst rising production costs. The company also announced the acquisition of a 51% stake in Venus India Asset-Finance Private Limited for INR500m, to be funded by cash accruals, which is not expected to materially alter credit metrics.