Crisil Ratings upgrades ratings of Solara Active Pharma to 'BBB+/A2'

Crisil Ratings stated that the rating upgrade reflects the substantial improvement in the company?s financial and liquidity risk profile in the past two fiscals, supported by sustained focus on deleveraging.

Total debt reduced significantly to around Rs. 500?530 crore as on 31 May 2026, from Rs. 999 crores as on 31 March 2024, aided by equity infusion of approximately Rs. 445 crores through rights issues in three tranches over the last two years.

The lower debt levels, coupled with improved operating performance over the past two fiscals, have resulted in a recovery in debt protection metrics, with interest coverage improving to around 2 times in fiscal 2026 from negative levels earlier.

The business risk profile, however, witnessed marginal moderation in fiscal 2026 following strong performance in fiscal 2025. Operating margin declined to around 13.64 percent in fiscal 2026 from 16.23 percent in fiscal 2025, though it remains healthy. The moderation is attributable to structural challenges in the Ibuprofen API segment, which has reported negative operating margins over the past two fiscals.

The company?s board has appointed bankers to evaluate strategic options for the Ibuprofen business, with a resolution expected by Q2 of the current fiscal. Crisil Ratings will continue to monitor developments in this segment and assess their impact on the overall credit profile.

The ratings continue to reflect Solara's established market position in its key active pharmaceutical ingredients (APIs) along with strong relationships with customers and suppliers and moderate financial risk profile.

These strengths are partially offset by susceptibility to regulatory change and volatility in operating profitability and negative EBITDA margin in the ibuprofen business.

Solara was formed through the demerger of the API business of Strides Shasun (currently named Strides Pharma Sciences). Solara acquired the human API business from Sequent Scientific during the same time, and hence, is a pure play API company.

The company had reported consolidated net profit to Rs 9.60 crore in Q4 FY26 compared with net loss of Rs 2.10 crore in Q4 FY25. Revenue from operations jumped 41.86% to Rs 387.29 crore in Q4 FY26.

The scrip shed 0.98% to currently trade at Rs 573.25 on the BSE.

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