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CRISIL downgrades ratings of UJAAS Energy Ltd

Posted On: 2019-06-07 13:57:02

Crisil has revised its rating as under:

Long Term Rating - CRISIL - BB+ / Stable (Downgraded from 'CRISIL BBB- / Negative')

Short Term Rating - CRISIL A4+ (Downgraded from 'CRISIL A3')

The downgrade reflects deterioration in the UJAAS Energy Ltd's (UEL) business risk profile. Offtake has reduced on account of ambiguity regarding tax rates applicable to engineering procurement and construction (EPC) contracts for solar power plants under the Goods and Service Tax (GST) Act. Further, increased competition in the industry has reduced the flow of new orders for the UEL. Consequently, revenue was at Rs. 159 crore in fiscal 2019, a decline of over 50% compared with the previous fiscal. Accordingly, cash accruals also have declined in fiscal 2019 with accruals of Rs.10.5 crore (not considering deferred tax) against which it had repayment obligation of Rs. 10.37 crore.

Delay in realisation ofreceivables has led to a stretched working capital cycle, with reduced levels of liquid funds and higher reliance on short-term fund based bank lines, Increase in UEL's order book now post the GST clarifications, performance in the e-vehicle segment along with improvement in working capital management will remain key rating sensitivity.

The rating also factors in the extensive experience of the promoters and the company's comfortable capital structure.

CRISIL believes that, these strengths are partially offset by working capital intensive operations, susceptibility of business to regulatory changes, and average debt protection metrics with just about adequate liquidity.

Shares of Ujaas Energy Limited was last trading in BSE at Rs.6.95 as compared to the previous close of Rs. 6.3. The total number of shares traded during the day was 75420 in over 256 trades.

The stock hit an intraday high of Rs. 7.48 and intraday low of 6.39. The net turnover during the day was Rs. 534300.

Source: Equity Bulls

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