The rating affirmation reflects the likely recovery in TCLs consolidated revenue and profitability from the trough during the pandemic fallout in the fiscal year ending March 2021. We expect the recovery to sustain over the upcoming 12 to 18 months, strengthening TCLs debt/EBITDA leverage to comfortably below 4.5x and EBITA margin towards 20%, says Kaustubh Chaubal a Moodys Vice President and Senior Credit Officer.
The stable outlook reflects Moodys view that TCL will sustain revenue growth across all its businesses, while maintaining its leading position in the global soda ash industry. In addition, the stable outlook continues to reflect Moodys expectation that TCL will retain its measured approach to growth and that it will prudently deploy its cash surplus in new EBITDA-accretive investments.
Moodys said that TCLs Ba1 CFR continues to reflect the companys leading position in the global soda ash markets and its competitive cost structure. This underpins its sustained strong profitability, which will lead to better leverage and coverage metrics. TCLs very good liquidity is also an underlying strength.
The rating also reflects TCLs relatively small scale when compared with that of its global chemical industry peers, as well as its exposure to the inherent cyclicality in end-user markets.
The Ba1 CFR continues to incorporate a one-notch uplift given Moodys expectation of timely, ongoing and extraordinary support from its parent, Tata Sons, should the need arise.
Earlier this week, the credit ratings agency CRISIL reaffirmed its rating on the commercial paper (CP) of Tata Chemicals at CRISIL A1+.
TCL manufactures soda ash and related chemicals, including sodium bicarbonate, caustic soda and bromides. The companys subsidiary, Rallis, is one of the leading players in the domestic crop protection sector, and manufactures pesticides, herbicides and fungicides.
The company reported 85% drop in consolidated net profit to Rs 29 crore on a 11% rise in income from operations to Rs 2,636 crore in Q4 FY21 over Q4 FY20.
The scrip rose 0.15% to end at Rs 749.15 on the BSE.
Powered by Capital Market - Live News