India Ratings and Research (Ind-Ra) has upgraded IFB Industries' (IFB) Long-Term Issuer Rating to 'IND A+' from 'IND A'. The outlook is stable.

The upgrade reflects the commencement of IFB's top-loading washing machine manufacturing facility in February 2015 which will increase its overall washing machine market share as well as its scale of operations and EBITDA margins FY16 onwards. IFB's leadership position in front-loading washing machines (with a market share of over 50%) will help it leverage the brand to gain a foothold in top loaders in which the company used to trade on a small scale earlier.

Revenue from manufacturing operations grew to Rs 9.9 billion in FY15 (FY14: Rs 7.8 billion) and is likely to grow further in FY16 on the back of higher top loader sales.

IFB is also undertaking capacity expansion and upgradation in its engineering division to cater to the growing orders from its customers, which will further boost manufacturing sales in FY17. The total project cost is likely to be around Rs 430 million, funded by internal accruals and a term loan of Rs 300 million. The capex is likely to be completed by March 2016.

The ratings remain constrained by IFB's limited product diversification with washing machines constituting half of its total revenue and its partial reliance on externally procured home appliances which continued to account for around 30% of its revenue.