CARE Ratings Limited has revised the credit rating for Mukka Proteins Limited's loan facilities. The rating for Long Term Bank Facilities amounting to ₹15.00 crore has been assigned as CARE BBB; Negative. For the Long Term/Short Term Bank Facilities of ₹480.00 crore (enhanced from ₹360.00 crore), the rating has been downgraded from CARE BBB+; Stable / CARE A2 to CARE BBB; Negative / CARE A3+.

The downgrade and revision in outlook to Negative from Stable are attributed to a substantial elongation of the company's working capital cycle to 226 days in FY25, up from 99 days in the previous year. This is primarily due to a significant build-up of inventory to 210 days (from 97 days), coupled with moderating average realisations of fish meal. Consequently, the liquidity buffer has weakened, indicated by high average utilization of working capital limits at 93% for the 12 months ending October 31, 2025.

While MPL's revenue declined by approximately 27% year-on-year in FY25 due to falling global fish meal prices, the PBILDT margin improved to 10.15%. However, debt coverage indicators deteriorated, with total debt/gross cash accruals rising to 7.35x and PBILDT interest cover falling to 2.76x in FY25. Despite these challenges, revenue grew by approximately 28% year-on-year in H1 FY26, with sustained profitability. The company is expected to report healthy revenue in H2 FY26 as global fish meal prices show an uptrend.

Ratings continue to derive comfort from MPL's established track record, healthy market position, geographically diversified production facilities, and a significant proportion of exports in its revenue mix. However, key weaknesses include the working capital intensive operations, exposure to volatility in raw material and fish meal prices, forex fluctuations, and regulatory risks.