RATING RATIONALE

26Nov2025

Fredun Pharmaceuticals Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 155.00 Crs. of Fredun Pharmaceuticals Ltd.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	147.59	Long Term	BWR BBB + /Stable Assignment
Fund Based	7.41	Short Term	BWR A3 + Assignment
Grand Total	155.00	(Rupees One Hundred Fifty Five Crores Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK

Brickwork Ratings assigns the ratings of BWR BBB+/Stable for the Long-term Bank Loan Facilities and BWR A3+ for the Short-term Bank Loan Facilities of Rs. 155 Crs. of Fredun Pharmaceuticals Ltd.

The ratings are primarily supported by the extensive experience of the promoters, the long vintage of the company, an established market position, a diversified product portfolio, and geographical reach. The company further benefits from a growing scale of operations and profitability, supported by a shift towards the higher-margin pet care segment, alongside steady support from its legacy business. However, the rating is constrained by significant working capital requirements, its presence in a regulated industry, and the susceptibility of margins to raw material price volatility and foreign currency exchange rates.

BWR also takes note of the company's plan to raise capital via share warrants and a preferential issue of equity shares to both promoters and non-promoters, from which it expects around Rs. 153 crore to flow in the next 18 months as it expects principal approval during the ongoing quarter. Of the projected Rs. 153 crores, Rs. 93 crores are expected to be infused during the ongoing fiscal year, with the majority of this inflow anticipated in Q3FY26. This initiative is expected to enhance the company's liquidity and competitive advantage; nevertheless, the timely infusion of these funds will remain a key monitorable factor.

BWR anticipates that Fredun Pharmaceuticals' business risk profile will be maintained over the medium term. The 'Stable' outlook reflects BWR's expectation that the company will sustain its growing scale of operations and profitability while simultaneously improving its liquidity profile in the medium term.

KEY RATING DRIVERS

Credit Strengths:

Improving operational risk profile :
The company's competitive advantage stems from its portfolio of 697 registered products across 52 countries, with over 1200 additional products currently undergoing global registration. This is significant, as product registration processes can take up to ten years. Furthermore, the company's pioneering position in the pet care industry contributes to higher margins. The longevity of its established pharmaceutical operations, combined with the introduction of modern products and the expertise of its highly experienced promoters, are collectively driving operational growth. TOI of the company grew at a CAGR of 28.54% for the FY23-FY25 period and stood at Rs. 453.82 cr. for FY25. With increasing contribution from the pet care segment, the company's profitability has also improved both in absolute and margin terms. Operating margin improved from 10.11% in FY23 to 11.60% in FY25, and PAT margin improved from 3.93% in FY23 to 4.59% in FY25.
Extensive experience of the promoters :
The company's profile is significantly supported by its leadership. Promoters Dr. Daulat Medhora and Mr. Fredun Medhora possess more than three decades of experience, having been instrumental in the company's R&D and new product development. Strategically, the promoters have already broadened product categories and expanded geographical reach, and they are committed to providing timely, need-based funding to continuously bolster the overall business profile.
Comfortable financial risk profile :
Financial risk profile of the company is marked comfortable with a healthy net worth base of Rs. 140.97 cr as of March 31, 2025, with a comfortable capital structure (overall gearing of 1.18 times as of March 31, 2025) and comfortable debt coverage indicators (ISCR of 2.35 times and DSCR of 1.62 times for FY25). Financial risk profile is expected to improve going forward, supported by capital infusion in the form of equity (Rs. 153 cr.) over the next 18-month period, with Rs. 93 cr expected to be received during the ongoing fiscal and remaining in FY27

Credit Risks:

Long working capital cycle :
Conversion cycle of the company remains extended, measuring 190 days as of March 31, 2025, an increase from 181 days in the previous year, This is a result of the requirement to maintain inventory across locations for its vast product portfolio, especially during the initial phases of launch of product when the demand is uncertain. Over the past three to four years, the company has simultaneously launched multiple products across various geographic regions. This has resulted in working capital limit utilisation ranging between 90-95% levels for last 12 months. With the infusion of equity over the next 18 month, BWR expects the utlisation levels are likely to ease out going forward. The risk of inventory writeoff is largely mitigated due to long expiry periods of the products ranging from 3-5 years. Although the company's profitability profiles remain susceptible to write-offs related to receivables, BWR notes that historically there have been limited or no write-offs in the last 3-4 years.
Exposure to regulatory and commodity price risks :
The pharmaceutical sector's highly regulated nature exposes the Company to potential shifts in government or regulatory policies, which could materially impact its business risk profile. Furthermore, intense competition within the generics market inherently restricts the pricing power and flexibility available to industry participants. Operationally, the Company faces significant cost-side pressure, as raw materials constitute a substantial 70% to 75% of the cost of sales. Consequently, the operating margin remains highly susceptible to sharp fluctuations in input prices.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone approach for the Company. BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive Sensitivities

Sustained growth in the scale of operations (above Rs. 700 cr) with improvement in profitability.
Improvement in TOL/TNW (under 1x times), marked by an improvement in the operating cycle. (below 150 days)

Negative Sensitivities

Any significant delay than emphasize for FY26-FY27 in forthcoming capital infusion through share warrants and a preferential issue of equity shares
Any significant write-offs concerning inventory and receivables, thereby moderating liquidity and profitability profile on a sustained basis.
Moderation in the scale of operation and/or moderation in profitability on a sustained basis.

LIQUIDITY INDICATORS - Adequate

The company's liquidity profile is considered adequate, underpinned by robust cash accruals of Rs. 24.62 crore for FY25 and a cash and bank balance of Rs. 4.82 crore as of March 31, 2025. This comfortably covers the term debt repayment of Rs. 6.92 crore for FY26. Further supporting this assessment are a moderate current ratio of 1.31 times as of March 31, 2025, and a healthy ISCR of 2.35 times. Conversely, the liquidity position is somewhat constrained by a high average utilization of working capital limits, which stood at 90-95% between November 2024 and August 2025, and an extended working capital cycle of 190 days as of March 31, 2025. BWR anticipates that the company's liquidity profile will improve with the forthcoming capital infusion through share warrants and a preferential issue of equity shares, alongside the proposed enhancement in working capital limits. However, timely infusion of these funds and no significant write-offs concerning inventory and receivables will remain the key monitorable.

ABOUT THE ENTITY

Macro Economic Indicator	Sector	Industry	Basic Industry
Healthcare	Healthcare	Pharmaceuticals & Biotechnology	Pharmaceuticals

Established in 1987, Fredun Pharmaceuticals Limited is a diversified pharmaceutical and pet care company. Based in Palghar, Maharashtra, it operates across five key segments: Generics (Fredun Gx), Pet Healthcare (Freossi and Fredna Vet Diagnostics), Nutraceuticals (Fredun Nutrition), Cosmeceuticals (Bird and Beauty and Beautyfred), and Mobility (Fredun Mobility & Chuu Balm). The product portfolio includes 697 registered products across 52 countries and 1200+ products under registration globally. Promoted by Mr. Fredun Medhora and Dr. (Mrs.) Daulat Medhora, the company is listed on the BSE.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 23 - 24 (Audited - Annual)	FY 24 - 25 (Audited - Annual)	FY 25 - 26 (Unaudited - Midterm-H1)
Operating Revenue	Rs.Crs.	348.16	453.82	263.45
EBITDA	Rs.Crs.	37.98	52.65	31.09
PAT	Rs.Crs.	15.62	20.81	16.50
Tangible Net Worth	Rs.Crs.	121.05	140.97	Not Available
Total Debt / Tangible Net Worth	Times	0.87	1.18	Not Available
Current Ratio	Times	1.54	1.31	Not Available

KEY COVENANTS OF THE FACILITY RATED

Standard covenant as per bank sanction letter

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2025)			2024		2023		2022
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	147.59	BWR BBB+/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Fund Based	ST	7.41	BWR A3+ (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		155.00	(Rupees One Hundred Fifty Five Crores Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Kanwalpreet Singh Ratings Analyst kanwalpreet.s@brickworkratings.com	Niraj Kumar Rathi Senior Director Ratings niraj.r@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com	Customer Support \| CustSupport@brickwrokratings.com

Fredun Pharmaceuticals Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	DBS Bank India Limited	Term Loan - Out-standing	6.01	_	6.01	Simple##
2	DBS Bank India Limited	Cash Credit - Sanctioned	6.00	_	6.00	Simple##
3	DBS Bank India Limited	Packing Credit (PC) - Sanctioned	_	7.00	7.00	Simple##
4	HDFC Bank	Cash Credit - Sanctioned	60.00	_	60.00	Simple##
5	Others	Cash Credit - Proposed	21.09	_	21.09	Simple##
6	Punjab and Sind Bank	Cash Credit - Sanctioned	14.90	_	14.90	Simple##
7	State Bank Of India (SBI)	Packing Credit (PC) - Sanctioned	_	0.41	0.41	Simple##
8	State Bank Of India (SBI)	Cash Credit - Sanctioned	39.59	_	39.59	Simple##
Total			147.59	7.41	155.00
TOTAL (Rupees One Hundred Fifty Five Crores Only)

## BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

ANNEXURE-II

INSTRUMENT DETAILS

Instrument	Issue Date	Amount (Rs.Crs)	Coupon Rate (%)	Maturity Date	ISIN Particulars	Complexity of the Instrument
Nil	Nil	Nil	Nil	Nil	Nil	Nil

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
Nil	Nil	Nil	Nil

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Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,560 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner.

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