On long-term Unallocated Limit Rs74.39cr, the credit rating agency assigned ICRA AA- (Stable) rating. For short-term non-fund Based Limit Rs23.61cr ICRA A1+ rating was assigned.
“The assigned ratings consider the extensive experience of the management and the established track record of Rossari Biotech Ltd. (Rossari) in the speciality chemical manufacturing business, spanning around two decades. The ratings consider the company’s healthy financial risk profile, characterised by healthy profit margins and return indicators,” the company shared ICRA’s rating rationale on Wednesday.
It further said, the capital structure and coverage indicators are strong aided by funds raised through IPO in FY2021, post which the company became debt free. The ratings also factor in the company’s established market position in the textile speciality chemical industry, its strong in-house research and development (R&D) facilities, increasing diversification in product portfolio and established relationships with a wide customer base.
Moreover, the ratings factor the completion of the recent equity fund raising exercise of Rs300cr, which indicates the strong financial flexibility of the company as well as boosts its net worth base. While the recent announcement of acquisition of Unitop Chemicals Pvt. Ltd. (Unitop) would support the further scaling up of operations significantly as well as provide diversification benefits, the fund raised ensures the strong liquidity position even after completion of the acquisition.
The assigned ratings are, however, constrained by the exposure of Rossari’s profitability to adverse movement in raw material prices, though the company has been able to pass on the price rise to its customers to a certain extent.
Further, the ratings factor in the competition in the speciality chemicals segment from domestic players as well as large multinational companies, which restricts the pricing flexibility.
The Stable outlook on the [ICRA]AA-rating reflects ICRA’s opinion that the company will continue to benefit from the extensive experience of its promoters in the speciality chemical industry and is likely to witness healthy revenue growth. Further, the credit profile of Rossari is expected to remain stable with strong liquidity position and equity funded acquisition.
At around 12.47 PM, Rossari Biotech Ltd was trading at Rs1,171.60 per piece up by Rs6.5 or 0.56% from its previous closing of Rs1,165.10 per piece on the BSE.