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Brickwork reaffirms and withdraws ratings of Elecon Engineering's credit facilities

The reaffirmation of the bank loan ratings takes into account EECL’s established market position.

September 29, 2021 2:46 IST | India Infoline News Service
Brickwork Ratings revises the Outlook to Stable and reaffirms the ratings for the Bank Loan Facilities of Rs734.50cr at 'BWR A-/Stable' and withdraws ratings of Non-Convertible Debentures amounting to Rs97.14cr of Elecon Engineering Company Ltd

Brickwork Ratings (BWR) has essentially relied on the audited financial results of Elecon Engineering Company Ltd (EECL or the company) up to FY21, quarterly financials of Q1FY22, projections of FY22, and publicly available information and information/clarifications provided by the company.

BWR has withdrawn the rating of BWR A -/Negative for the NCDs amounting to Rs97.14cr as the debentures have been fully redeemed before the maturity date. The confirmation to this effect has been obtained from the issuer and debenture trustee.

The reaffirmation of the bank loan ratings takes into account EECL’s established market position, comfortable and improving capital structure, healthy cash flow generation and adequate liquidity in the form of unencumbered cash and bank balances, and unused bank lines.

The revision in the outlook to Stable reflects the improvement in operating profitability, reduction in debt (including prepayments), easing of working capital cycle and decrease in historically high receivables albeit amidst declining sales. The timely realisation of receivables and reduction of contingent liability will remain a key rating sensitivity.

Elecon Engineering was trading at Rs165.10 apiece down by Rs1.15 or 0.69% on the BSE, at around 2:47 PM.

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