CARE Ratings reaffirms ratings of Dredging Corporation of India at 'BBB+/A3+'

The agency has also affirmed the company's short-term rating at 'CARE A3+'.

CARE Ratings stated that the reaffirmation of the ratings assigned to the bank facilities of Dredging Corporation of India (DCIL) continues to derive strength from its established presence of nearly five decades in domestic and overseas dredging services, strong parentage with shareholding held by major ports of the country, and a growing order book providing medium-term revenue visibility.

The rating favourably factors in the support extended by the sponsors in form of funds extended via work advances and unsecured loans for dredger acquisition and settlement of liabilities. Promoter support is expected to continue in the near term to support liquidity and fund capital expenditure requirements.

The ratings also factor in steady growth in revenue during FY25 and 9MFY26, wherein revenue witnessed year-on-year growth of 21% and 7%, respectively, driven by increased order inflow and execution. Working capital intensity improved, as reflected by reduced receivable days and trade payables.

DCIL continues to maintain a comfortable leverage profile. CareEdge Ratings notes that DCIL has availed an additional term loan of Rs 150 crore from Sagarmala Finance Corporation for dry docking and other major maintenance expenses.

Along with term loans availed from Sagarmala Finance Corporation Limited and new loan being availed for a new dredger, leverage and debt coverage indicators is expected to moderate in the near term. However, post-acquisition of the new dredger, DCIL will be able to undertake capital dredging work, which is expected to improve capacity utilisation and debt coverage indicators from FY27.

The rating strengths are tempered by the ageing dredger fleet leading to high maintenance expenses, exposure to foreign exchange risk due to unhedged foreign currency debt, volatility in margins owing to fuel price fluctuations, and increased competition from domestic and global private players.

Dredging Corporation of India (DCIL) provides integrated dredging services such as dredging and reclamation, marine services and construction, shallow water/inland dredging, and underwater mining to major and non major ports, Indian Navy, and other maritime organisations in India.

The scrip had gained 0.89% to end at Rs 900.30 on the BSE today.