ICRA Limited has reaffirmed the long-term rating of [ICRA] A (pronounced ICRA A) and short-term rating of [ICRA]A1 (pronounced ICRA A one) assigned earlier to the Rs. 350.0 crore Bank Facilities of the Company, and has assigned a long-term rating of [ICRA] A (pronounced ICRA A) to the proposed additional Bank Facilities of Rs. 425.0 crores.
The ratings reaffirmation continues to consider the established track record of the promoters with experience of more than 30 years in the paper industry and its large scale of operations. The ratings continue to factor in the healthy financial profile of N R Agarwal Industries Limited (NRAIL), characterised by robust profitability levels and coverage indicators coupled with comfortable leveraging levels. Further, ICRA notes that NRAIL has an established network of agents for selling its products and has a strong presence in western India. Moreover, its capacity utilisation levels have remained healthy over the past few years, supported by good demand indicators.
The ratings, however, remain constrained by the vulnerability of NRAIL's profitability to fluctuations in waste paper prices, which also impacted the margins in FY2021, along with continuing demand pressure in the writing paper segment due to the Covid-19 pandemic. The profit margins also remain vulnerable to any adverse fluctuations in foreign exchange in the absence of a firm hedging mechanism as ~50% of its raw material requirements are met through imports. However, the company also derives nearly 15-21% of its revenues through exports, which provides a natural hedge to an extent. ICRA notes that the company is planning to incur a sizeable debt-funded capex over FY2022-FY2024 towards capacity enhancement of duplex paper board, which exposes it to project execution risk. Though the project is spread over the next two fiscals and the repayment is likely to start post moratorium from then, the ability of the company to achieve financial closure at favourable terms, timely execution of the project, with no material impact on the capital structure and coverage indictors will remain key ratings factors, going forward.
The Stable outlook reflects ICRA's expectations that NRAIL will benefit from the extensive experience of its promoters, its large scale of operations and healthy profit levels.
Shares of N.R.AGARWAL INDUSTRIES LTD. was last trading in BSE at Rs. 239.55 as compared to the previous close of Rs. 233.9. The total number of shares traded during the day was 749 in over 116 trades.
The stock hit an intraday high of Rs. 240.6 and intraday low of 232.4. The net turnover during the day was Rs. 176048.