CARE assigns BBB/Stable rating on long-term bank facilities of Centum Electronics; Stock ends 7% higher

The credit rating agency also assigns CARE BBB; Stable/CARE A3+ rating on the company’s Rs159cr long-term / short-term bank facilities.

May 19, 2021 04:05 IST India Infoline News Service

CARE Ratings Limited has reviewed the credit ratings of Centum Electronics Limited (CEL) on total bank facilities rated Rs355.7cr. The credit rating agency assigned CARE BBB; Stable rating on Rs196.70cr long-term bank facilities. It also assigned CARE BBB; Stable/CARE A3+ rating on Rs159cr long-term / short-term bank facilities.

“The rating assigned to the bank facilities of CEL takes into account long track of operations of the company and extensive experience of the promoters in the industry which has helped the company in establishing relationship with reputed clientele from various industries ensuring repeated orders,” the company shared CARE Ratings rationale.

It further said, the rating also positively takes note of satisfactory order book position, improvement in operating cycle with realisation of significant receivables during FY21 and above average financial risk profile marked by stable income and satisfactory gearing levels witnessed after weak performance in FY18. These rating strengths are partially offset by its working capital-intensive nature of operations which involves dealing with govt. bodies.

The rating also takes note of investment in loss making subsidiary, Centum Adetel Group S.A. (CAG)turnaround of which may take more than envisaged time due to Covid-19. Company’s ability to turn its subsidiary into self-sustainable operations will be a key monitorable. Further, company’s ability to manage its operations under current scenario of shortage of semiconductors would also be important from credit perspective.

Centum Electronics Ltd trade on Wednesday ended at Rs426 per piece up by Rs28.85 or 7.26% from its previous closing of Rs397.15 per piece on the BSE.

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