Ind-Ra upgrades Indo Rama Synthetics ratings to IND A- / Stable / India A2+; Stock up 1%

14 Mar 2022 , 12:38 PM

India Ratings and Research (Ind-Ra) has upgraded Indo Rama Synthetics (India) Limited’s (IRSL) Long-Term Issuer Rating to ‘IND A-’from ‘IND BBB+’. The Outlook is Stable.

The rating on Working capital facilities Rs11.05 billion (increased from Rs9 billion) has been upgraded to IND A- / Stable / India A2+.  For Term Loans Rs2.94 billion (reduced from Rs4.46 billion) with maturity date of July 2024, the rating has been upgraded to IND A- / Stable.

At around 12.42 am, Indo Rama Synthetics (India) Ltd was trading at Rs67.85 per piece up by Rs0.65 or 0.97% from its previous closing of Rs67.20 per piece on the BSE.

“Ind-Ra continues to take a consolidated approach of IRSL and its two 100% subsidiaries, Indo RamaYams Private Limited and lndo Rama Venture Yam Private Limited. The ratings also continue to factor in the moderate-to-strong operational, financial and strategic linkages between IRSL and its parent, lndo Rama Ventures Public Company Limited (IVL; holds 38.57% stake in the company),” company shared Ind-Ra’s rationale of rating on Friday.

It further said, the upgrade reflects the improvement in IRSL’s operational performance during 9MFY22, and Ind-Ra’s expectation that the capacity utilisation of the four operational continuous polymerisation (CF) plants improved in Q4FY22 (above 80%) would continue to remain high over the long term. The fifth CP plant, and its likely commissioning by FY23-FY24, would aid in the production of bottle grade pet resin, thereby improving the value addition.

Additionally, in FY24, the business profile is likely to undergo a change post the completion of the capex on the downstream value-added drawn texturized yam facilities which would ensure a greater proportion of low-value  added partially oriented yam being consumed captively leading to a higher value addition overall. The above mentioned changes will help strengthen IRSL’s business profile and reduce margin volatility over the long term.