CRISIL has downgraded its rating on bank facilities of Shankara Building Products Ltd (Shankara; a part of the Shankara Buildpro group) to 'CRISIL BBB+/Stable/CRISIL A2' from 'CRISIL A-/Negative/CRISIL A2+'.
CRISIL also has downgraded its rating on the commercial paper to 'CRISIL A2' from 'CRISIL A2+'.
The downgrade reflects the moderation in the group's overall business risk profile marked by continued supressed return on capital employed (RoCE) levels and working capital intensity. Erstwhile levels of 6 plus percentage operating margins is not expected to materialise over the medium term on account of commodity nature of business and intense competition. It has remained at around 4-4.5% levels. Working capital intensity remains high with gross current asset (GCAs) at over 110 days. Subsequently the RoCE has remained subdued at 12% or thereabouts. The downgrade also takes into account the lack of moderation in overall leverage inspite monetisation of assets. Combination of debt and reliance on creditors has meant total outside liabilities to tangible net worth (TOL/TNW) ratio to remain aggressive at over 1.3 times, as against earlier expectations of close to 1 time.
The ratings continue to factor in the group's established market position and extensive experience of the promoter in the building material distribution and retailing businesses, the diversified product offerings, longstanding association with vendors, and average financial risk profile. These strengths are partially offset by susceptibility to economic cycles and sharp variation in raw material prices.
Shares of Shankara Building Products Ltd was last trading in BSE at Rs.244.55 as compared to the previous close of Rs. 257.4. The total number of shares traded during the day was 100799 in over 100 trades.
The stock hit an intraday high of Rs. 270 and intraday low of 244.55. The net turnover during the day was Rs. 24654422.