CARE reaffirms India Cements credit rating; Revises Outlook to Stable

28 Feb 2022 , 01:48 PM

CARE Ratings Limited has assigned credit ratings to India Cements Limited (ICL) bank facilities. The rating on long-term bank facilities has been reaffirmed at CARE A with Outlook revised to Stable from Positive. For short-term bank facilities, the CARE Al rating has been reaffirmed.

At around 1.50 pm, India Cements Ltd was trading at Rs198.55 per piece up by Rs1.5 or 0.76% from its previous closing of Rs197.05 per piece on the BSE.

“The outlook for ICL has been revised from positive to stable as the expected growth in volumes and profitability has not been achieved in 9MFY22 (refers to the period from April 01 to Dec 31) and the same will be likely lower than expected levels for the full fiscal year 2022.

The sales realization of cement has though sustained in 9MFY22, but the profitability (PBILDT per tonne) has been impacted primarily on account of the cost side pressures and lower sales volume as against envisaged leading to moderation in its debt protection measures. The ability of the company to improve its profitability levels and bring down its debt levels going forward shall remain key rating monitorable,” company shared CARE Ratings rationale.

The ratings continue to factor in the market position of The India Cements Limited (ICL) in the southern markets as one of the largest players with established presence, its strong brand image in all the five southern states, integrated nature of operations with presence of captive power plants and revenue contribution from non-southern states resulting in geographical diversification. The ratings are, however, tempered by the susceptibility of the revenues and profitability to the demand-supply dynamics of the cement market, ICL’s moderate leverage levels, relatively low profit margins, exposure to group entities and cyclical nature of cement industry.