CARE downgrades rating on long-term credit facilities of BHEL

The credit rating agency has downgraded the company’s CARE AA’ to ‘CARE AA-’ while reaffirming the outlook to ‘Stable’.

Jun 25, 2021 12:06 IST India Infoline News Service

CARE Ratings Limited has downgraded the rating on the long-term bank facilities of Bharat Heavy Electricals Limited (BHEL) from ‘CARE AA’ to ‘CARE AA-’ while reaffirming the outlook to ‘Stable’.

“The revision in the long-term ratings of BHEL takes into account a lower-than-expected execution of orders in FY21 primarily due to the lockdown due to Covid-19 pandemic, resulting in significant decline in total operating income and operating loss for the company, and a consequent deterioration in the company’s debt protection metrics. Notwithstanding persistent initiatives of the company to rationalize its overheads, the margins are likely to remain under pressure in FY22 also,” company shared rating rationale of CARE.

“The revision in the ratings also factors in the diminishing order inflow both in “power” as well as “industry” segments. Furthermore, the ratings continue to factor in the company’s elongated working capital cycle as a result of increasing contract assets given the adverse payment terms in its orders, which is partly offset by an improved collection of trade receivables,” it added.

At around 12.18 PM, Bharat Heavy Electricals Ltd was trading at Rs65.50 per piece up by Rs0.8 or 1.24% from its previous closing of Rs64.70 per piece on the BSE.

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