India Ratings downgrades Sanghi Industries to ‘IND A-/Negative; Stock under pressure

21 Mar 2022 , 10:55 AM

India Ratings and Research (Ind-Ra) has downgraded Sanghi Industries Limited’s (SIL) Long-Term Issuer Rating to ‘IND A-’ from ‘IND A’. The Outlook is Negative.

The rating on Term Loan Rs794.50 crore (reduced from Rs837 crore) was downgraded from IND A/Negative to IND A-/Negative. For Non-Convertible Debentures Rs305 crore, the rating was downgraded from India A / Negative to IND A- / Negative.

The credit rating agency also downgraded the rating on Fund Limits based limits Rs285 crore from IND A/Negative to IND A-/Negative. For Non fund based limits Rs40 crore, rating has been downgraded from IND A1 to IND A2+.

“The downgrade reflects a slower-than-expected ramp-up in SIL’s sale volumes resulting in reduced EBITDA, a delay in deleveraging and a stretched liquidity position. The Negative Outlook reflects the challenges around cash flow generation starting mid-FY23, coinciding with the seasonally weak monsoon quarters, which could get exacerbated in the context of near term input cost inflation. Timely infusion of funds by the management by 1QFY23 and a ramp-up of EBITDA will remain a key monitorable,” company shared Ind-Ra’s rating rationale.