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ICRA upgrades credit rating outlook of Bal Pharma from Stable to Positive; Stock soars 3%

The rating has been reaffirmed on long-term fund-based facilities at ICRA BB+ and short-term rating at ICRA A4+.

December 22, 2021 11:38 IST | India Infoline News Service
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ICRA Limited has upgraded the credit rating outlook of Bal Pharma Limited from Stable to Positive. The rating on long-term fund-based facilities has been reaffirmed at ICRA BB+ (Positive). Outlook revised to Positive from Stable.

The credit rating agency also reaffirmed rating on short-term non-fund-based facilities at ICRA A4+. On long-term Term Loan ICRA BB+ (Positive) rating was reaffirmed with Outlook revised to positive from stable.

At around 11.42 am, Bal Pharma Ltd was trading at Rs99.95 per piece up by Rs2.95 or 3.04% from its previous closing of Rs97 per piece on the BSE.

The credit rating agency has considered the following material events for upgrading the rating outlook from “stable” to “Positive.”

Improved credit profile followed by continued healthy demand for its products under both Active Pharmaceutical Ingredients (API) and formulations segments, in the domestic and International markets.
Approval received by the Company for the production linked incentive scheme (PLI) 2.0, which is expected to support the company’s cash flows given that the Company is expected to receive Rs50cr as incentive over a period of six years under this scheme which will be deployed towards the capital expenditure and R&D expenses incurred by the Company.
Expected equity infusion during FY23, Improvement in revenues and profitability in FY21 and H1FY22, Dominant market share of Gliclazide (Antidiabetic therapeutic API) both in domestic and export markets are some of the other factors that ICRA has considered in revising its outlook from ‘stable’ to ‘positive’.

However the company has declined to accept the rating assigned by ICRA and has insisted for an upgrade to investment grade rating i.e. BBB, as the company has shown comprehensive growth in its performance during FY21 and H1FY22.

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