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Educomp Solutions extends losses post rating downgrade from CARE

Capital Market/ 09:51 , Jun 06, 2013

Educomp Solutions was locked at 5% lower circuit at Rs 42.95 at 9:53 IST on BSE, with the stock extending Wednesday's slide triggered by the rating agency CARE on Tuesday, 4 June 2013, downgrading its rating on bank facilities of the firm to default.

Meanwhile, the S&P BSE Sensex was down 143.43 points or 0.73% at 19,424.79.

On BSE, 46,000 shares were traded in the counter as against average daily volume of 2.75 lakh shares in the past one quarter.

The stock opened with a downward gap, sliding by the maximum 5% daily circuit at Rs 42.95 and remained locked at the 5% level so far in the day. The current stock price of Rs 42.95 is also a 52-week low for the counter. The stock had hit a 52-week high of Rs 182.70 on 5 October 2012.

The stock had underperformed the market over the past one month till 5 June 2013, sliding 30.46%, compared with the Sensex's 0.04% fall. The scrip had also underperformed the market in past one quarter, declining 39.12% as against Sensex's 2.22% gain.

The small-cap company has equity capital of Rs 24.49 crore. Face value per share is Rs 2

Shares of Educomp Solutions have tumbled 9.67% in two trading sessions from Rs 47.55 on Tuesday, 4 June 2013, after rating agency CARE on Tuesday, downgraded its rating on the bank facilities of the company to default. The stock had tumbled 4.94% to settle at Rs 45.20 on Wednesday, 5 June 2013.

CARE has downgraded the rating on the long-term bank facilities of Rs 299.07 crore as well as that on long-term/short-term bank facilities of Rs 410 crore of Educomp Solutions (ESL) to CARE D. The instruments assigned CARE D rating are deemed as at default or expected to be in default soon. The revision in the ratings of ESL takes into consideration the ongoing delays by the company in the servicing of its debt obligations pertaining to the bank facilities on account of a significant deterioration in the company's liquidity position and financial risk profile during the year ended 31 March 2013 (FY 2013), CARE said.

The ratings revision further takes into consideration the weak financial performance of the company during FY 2013 characterized by a decline in the operating income, low PBILDT margins and net loss incurred during the year, CARE added. Going forward, the company has plans to reduce its debt levels and improve its liquidity profile by sale of some more non-core assets, including land parcels and the ability of the company to realize proceeds from the same as envisaged would be a key rating sensitivity, CARE said. Furthermore, the ability to improve its operational performance, maintain its market leadership position amidst a competitive scenario and improvement in the performance of its group companies would remain the key rating sensitivities, CARE said.

Educomp Solutions reported consolidated net loss of Rs 147.93 crore in Q4 March 2013, as against net profit of Rs 61.54 crore in Q4 March 2012. Net sales declined 34.5% to Rs 336.41 crore in Q4 March 2013 over Q4 March 2012.

Educomp Solutions is a globally diversified education solutions provider and the largest education company in India. Educomp Group reaches out to over 32,000 schools and approximately 20.9 million learners and educators across the world.


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