Rama Steel Tubes’ ratings on watch after acquisition news

ICRA Limited has revised the credit ratings for Rama Steel Tubes Limited (RSTL), placing its long-term and short-term facilities on "Rating Watch with Developing Implications." The previous long-term rating of [ICRA]BB+(Stable) has been updated to [ICRA]BB+;Watch developing, while the short-term rating of [ICRA]A4+ is now also on "Rating Watch with Developing Implications." The total bank loan facilities rated amount to AED 110 crore.

This rating action follows RSTL's announcement on December 11, 2025, regarding the joint acquisition of a 100% stake in UAE-based Automech Group Holding Limited for AED 296 million. The acquisition will be executed through its UAE subsidiary, RST International Trading FZE (acquiring ~78.38% for AED 232 million), and Rama Steel Tubes Ltd (acquiring ~21.62% for AED 64 million). A portion of the consideration will be settled through a share swap involving the issuance of fresh equity shares worth AED 64 million.

The acquisition is expected to enhance RSTL's presence in the Middle East and diversify its product mix into high-margin engineering and fabrication segments. However, ICRA notes that the transaction's sizeable nature relative to RSTL's current scale means it will likely be partly debt-funded, which could pressure leverage and coverage metrics. ICRA will monitor financing arrangements, regulatory approvals, and operational synergies closely.