The rating on long-term bank facilities Rs768cr (Reduced from Rs776.50cr) has been reaffirmed at CARE A; Stable. On long-term / short-term bank facilities Rs5,500cr was reaffirmed at CARE A; Stable / CARE A1.
At around 1.55 pm, Apar Industries Ltd was trading at Rs673 per piece down by Rs0.6 or 0.09% from its previous closing of Rs673.60 per piece on the BSE.
“The ratings assigned to bank facilities of Apar Industries Limited continue to factor in the established and leadership position in Conductors and Transformer and Specialty Oil (TSO) segment, diversified revenue streams, long-standing experience of the promoters and their ability to expand the product portfolio and optimize the operations.
The aforementioned strengths are tempered by limited value addition, as large part of the orders is acquired by tender bidding process translating into limited scope for profit margin expansion and working capital intensive nature of business resulting in higher reliance on working capital borrowing (largely non-fund-based limits) leading to higher leverage indicators,” company shared CARE Ratings rationale.
The overall gearing marginally improved to 1.69x in FY21 (PY:1.82x) on a consolidated basis. The Total Operating Income (TOI) declined by 14% on a yoy basis at the consolidated level due to lower order execution in the conductor and cables segment in FY21 as a result of COVID; however this was offset by yoy volume improvement as well as higher realizations in the TSO segment.
The ratings also take cognizance of the inherent business risk on account of its exposure to the raw material price risk, foreign currency volatility and increasing competition in the industry.