Pokarna Limited Ratings upgraded to 'CRISIL BBB/Positive/CRISIL A3+'

CRISIL Ratings has upgraded its ratings on the bank facilities of Pokarna Ltd (PL; part of the Pokarna group) to 'CRISIL BBB/Positive/CRISIL A3+' from 'CRISIL BBB-/Stable/CRISIL A3'. Also the rating on the proposed long-term bank loan facility of Rs 71 crore has been withdrawn at the company's request which is in line with CRISIL Ratings' policy for withdrawal of ratings.

The rating action reflects moderation of project risk with commencement of commercial operations at the new quartz surfaces unit and stabilisation of operations, as per expected timelines. The Pokarna group had undertaken a large capital expenditure (capex) of over Rs 470 crore for setting up a greenfield quartz surfaces manufacturing unit, which was commissioned on March 24, 2021. Post commencement of operations and quick stabilisation, revenue is estimated to grow by 60-70% in fiscal 2022, to over Rs 470 crore, led by robust demand. Operating margin should also sustain at 30-32% over the medium term, resulting in healthy debt protection metrics. Financial risk profile will continue to be aided by the adequate net cash accrual and absence of any major debt funded capex plans.

The rating action also factors in sufficient liquidity and financial flexibility, post completion of major capex. Consequently, bulk of the cash accrual will be utilised to fund the incremental working capital requirement and reduction of debt. This in turn is likely to strengthen the capital structure and debt protection metrics. Healthy flow of orders leading to higher capacity utilisation at the new unit, and sustenance of profitability are key monitorables.

The ratings also reflect the established market position of the group in the granite and engineered stones businesses, supported by extensive experience of its promoters, established client relationships and the healthy operating margin. These strengths are offset by susceptibility to moderate demand risk and fluctuations in foreign exchange (forex) rates.

Shares of Pokarna Limited was last trading in BSE at Rs. 623.50 as compared to the previous close of Rs. 639.55. The total number of shares traded during the day was 4247 in over 478 trades.

The stock hit an intraday high of Rs. 641.50 and intraday low of 619.50. The net turnover during the day was Rs. 2681574.00.

Source : Equity Bulls

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