The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope Ratings GmbH (Scope) has today affirmed the BB- issuer rating on JSC Nikora (‘Nikora’) and revised Outlook to Stable from Negative. Scope has also affirmed its BB- rating on senior unsecured debt.

The full list of rating actions and rated entities is at the end of this rating action release.

 Key rating drivers

Business risk profile: BB- (unchanged). Nikora’s business risk profile remains supported by its strong competitive position, anchored by a solid market share in Georgia’s FMCG and retail sectors. The company benefits from well-established production facilities and high brand recognition in essential consumer goods, particularly meat and dairy products. Its vertically integrated business model underpins stable gross margins. However, the rating continues to be constrained by Nikora’s relatively small scale in a European context and its concentration in a single market.

Brand strength is reinforced by numerous awards for product quality, and the recent launch of a new brand targeting medium-to-high-income consumers reflects a strategic focus on market segmentation. Looking ahead, Nikora plans to expand its brand portfolio to facilitate entry into third-party markets, enhancing its competitive positioning and growth prospects. This strategy has supported a solid Scope-adjusted EBITDA margin* of around 30% in the consumer goods segment, with historically low volatility. Conversely, the retail arm faces pressure on operating profitability following the integration of seven direct competitors into Georgia’s largest retail chain.

Financial risk profile: BB- (unchanged). Scope projects that Nikora will deliver sales growth of around 11%-12% in 2025, broadly aligned with the performance of its retail segment. Growth is expected to be supported by new store openings, expansion in the FMCG market, and stronger consumer demand driven by recent brand initiatives targeting higher-income segments.

Capital expenditure is expected to be managed prudently, with spending contingent on free operating cash flow, financing availability, and covenant compliance. Investments will focus on logistics centre construction and brand development to facilitate entry into third-party markets. Despite these strategic investments, Scope expects Nikora to maintain financial discipline and avoid excessive leverage.

Leverage is forecast to rise temporarily, with the debt/EBITDA ratio reaching around 3.5x in 2025 (2024: 2.8x), reflecting two GEL 60m bond issuances and a slight EBITDA decline. Scope anticipates leverage improving to around 3.0x in 2026 as margins recover following pricing strategy realignment in the retail segment. Interest coverage is projected to decline to close to 4.0x in 2025 (2024: 4.9x) due to higher debt costs. Funds from operations/debt is expected to fall to a 20% - 25% range (2024: 28%), reflecting continued pressure on operating profitability and elevated debt levels. Free operating cash flow is projected to stay slightly negative, as gains from accelerated inventory turnover in retail will be offset by increased capital expenditure.

Liquidity: adequate (revised from inadequate). Nikora’s preference for rolling over short-term debt rather than securing committed revolving credit facilities reflects a cost-efficient approach commonly observed in emerging markets. However, this strategy heightens the company’s refinancing risk. Scope expects that available cash, cash equivalents, and committed unused bank lines will cover roughly 32% of short-term debt and anticipated negative free operating cash flow in 2026. Despite a recent deterioration in credit metrics, the company’s strong local reputation, consistent bank support, and ability to manage liquidity through flexible capital expenditure justify the ‘adequate’ liquidity assessment. This view is further reinforced by the recent successful issuance of a GEL 60m bond, which has eased refinancing pressures, with no large maturities coming due before 2029.

Supplementary rating drivers: credit-neutral (unchanged). The ratings are unaffected by supplementary rating drivers.

Outlook and rating sensitivities

The Stable Outlook reflects Scope's view that the company’s recent successful GEL 60m bond issuance has significantly reduced refinancing risks. Scope expects Nikora to implement its sizeable capital expenditure programme by focusing on high-impact projects, while maintaining a disciplined financial approach to safeguard credit quality. This includes keeping the debt/EBITDA ratio at or below 3.5x, supported by a recovery in operating profitability, despite intensifying competitive pressures.

The upside scenario (currently deemed remote) for the ratings and Outlook is:

1. Significant growth of operations outside of Georgia with credit metrics remaining in line with Scope’s expectations.

The downside scenario for the ratings and Outlook is:

1. Debt/EBITDA above 3.5x on a sustained basis

Debt ratings

Scope has also affirmed senior unsecured debt rating at BB-. The recovery analysis is based on a hypothetical default scenario in 2026, which results in an ‘excellent’ recovery rate. However, given the unsecured nature of the bonds and the risks associated with emerging markets, Scope has not notched up the senior unsecured debt rating above that of the issuer.

Environmental, social and governance (ESG) factors

ESG factors have no impact on this credit rating action.

All rating actions and rated entities

JSC Nikora

Issuer rating: BB-/ Stable, Outlook change

Senior unsecured debt rating: BB-, affirmation

*All credit metrics refer to Scope-adjusted figures.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings and Outlook, (General Corporate Rating Methodology, 14 February 2025; Retail and Wholesale Rating Methodology, 25 June 2025; Consumer Products Rating Methodology, 31 October 2025), are available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication/. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings’ internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and Outlook and the principal grounds on which the Credit Ratings and Outlook are based. Following that review, the Credit Ratings and Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlook are UK-endorsed
Lead analyst: Dániel Szebényi, Director
Person responsible for approval of the Credit Ratings: Philipp Wass, Managing Director
The issuer Credit Rating/Outlook was first released by Scope Ratings on 15 August 2019. The Credit Ratings/Outlook was last updated on 29 August 2025.
The senior unsecured debt Credit Rating was first released by Scope Ratings on 14 September 2020. The Credit Rating was last updated on 29 August 2025.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
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