Rating agency ICRA Limited has downgraded the credit rating of the company’s commercial papers worth Rs 50 crore from existing ICRA ‘A1+’ to ‘A1’, stated PVR Limited in its regulatory filing.
The downgrade of the short-term rating for the Commercial Paper programme of PVR Limited (PVR) takes into account the prolonged impact of Covid-19 on the PVR’s operations, which has significantly affected the company’s operational metrics, cash flows and leverage metrics. Before the third wave, the performance was on an improvement trajectory. With the support of good content, Q3FY2022 witnessed significant improvement in the operational metrics of the company.
With the surge in the Covid cases, many of the key states have imposed restrictions on the cinema operations from the end of December 2021, both in terms of time and capacity with states like Delhi & Haryana (where PVR has a presence) shutting down cinemas completely.
As per the company, the rating, however, continues to derive comfort from the company’s adequate liquidity position, as reflected by cash and equivalents of around Rs. 678 crore and undrawn limits of Rs. 63 crore as of December 2021. The company has raised incremental debt of around Rs. 430 crore in YTDFY2022 to shore up liquidity. During FY2021, it had successfully concluded the rights issue of Rs. 300 crore in August 2020 and qualified institutional placement (QIP) of Rs. 800 crore in February 2021, enabling the company to fund losses in FY2021.
The rating further considers PVR’s strong brand and leadership position in the domestic film exhibition industry, with 179 properties and a total of 860 screens across India as of YTD FY2022, which also enables it to tie up spaces at competitive rates at premium locations across the country.
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