CRISIL reaffirms rating of Ramco Industries Ltd

CRISIL Ratings has reaffirmed its rating on the commercial paper programme of Ramco Industries Limited (RIL) at 'CRISIL A1+'.

For the nine months ended December 31, 2021, RIL (on a standalone basis) registered a profit after tax (PAT) of Rs 92 crore (Rs 86 crore in the corresponding period of fiscal 2021), on net revenue of Rs 879 crore (Rs 726 crore). Revenue growth was supported by healthy demand from rural markets, and substitution demand, with the price of steel products (substitute) also registering a sharp increase. Besides, the company's textiles segment also performed well. Operating profitability declined marginally to 15.8% during the 9 month period ended December 31, 2021 from 17% in the corresponding period of the previous fiscal, due to higher raw material and logistics cost.

The demand for asbestos roofing products is likely to remain steady with anticipated increase in rural income over the near to medium term, supported by good crop output. Demand for calcium silicate board and textile products have also recovered in fiscal 2022 driven by recovery in end markets. These factors, along with steady demand for asbestos roofing products in Sri Lanka, should help achieve moderate volume growth of 5-7% over the medium term. The operating margin should also remain steady at ~12-14% levels given the brand equity in the market and increasing share of value-added products.

The rating continues to reflect RIL'S established position in the domestic asbestos cement (AC) roofing market and improving presence in the Sri Lankan market, and healthy revenue diversity through presence in textiles, calcium silicate boards, and wind power segments. The rating also considers the company's adequate operating efficiencies, and its healthy financial risk profile, driven by steady cash accrual, prudent working capital management, and moderate expansion plans. The significant value of investments in listed Ramco group companies including The Ramco Cements Limited (RCL; rated 'CRISIL A1+') additionally supports RIL's financial flexibility. These strengths are partially offset by dependence of the AC roofing business on rural spending, and exposure to intense competition from peers as well as from substitute products. The company is also exposed to regulatory risks on manufacture and usage of asbestos, as well as change in policies of key asbestos-producing nations, given that India imports its entire asbestos requirement.

Shares of Ramco Industries Limited was last trading in BSE at Rs. 245.00 as compared to the previous close of Rs. 243.75. The total number of shares traded during the day was 6765 in over 507 trades.

The stock hit an intraday high of Rs. 250.10 and intraday low of 244.00. The net turnover during the day was Rs. 1672587.00.

Source : Equity Bulls

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RamcoIndustries INE614A01028 RatingReaffirmed