Dwarikesh Sugar's long term credit rating upgraded by ICRA to AA- from A+

ICRA, one of India's premier credit rating agencies, on February 06, 2023, has upgraded the long-term rating of Dwarikesh Sugar Industries Limited applicable to bank loans facilities of Rs. 800 crore from [ICRA] A+ to [ICRA] AA-. The outlook on the long-term rating has also been revised to 'Stable' from 'Positive'. Further, ICRA has re-affirmed the rating of Commercial paper facility of Rs. 300 crore of the Company at [ICRA] A1+.

The communication from ICRA reads as follows:

'Based on a review of the latest developments, the rating committee of ICRA, after due consideration, has upgraded the long-term rating to [ICRA] AA- (pronounced ICRA double A minus) ("Rating") from [ICRA] A+ (pronounced ICRA A plus). The Rating Committee of ICRA, after due consideration has also reaffirmed the short-term rating at [ICRA] A1+ (pronounced ICRA A one plus).'

'The rating upgrade of the debt programme of Dwarikesh Sugar Industries Limited (DSIL) factors in expected improvement in coverage metrics benefitting from reduced working capital borrowings with increased diversion of sugar towards ethanol besides favorable exports prospects. The distillery segment's increasing contribution to the operating income lends more stability to the cashflows besides contraction in inventory days resulting in improvement in the working capital cycle.'

'The rating continues to draw comfort from DSIL's efficient operations with one of the highest recovery rates in Uttar Pradesh (UP) that has supported its comfortable credit profile. Moreover, being forward-integrated into co-generation and distillery operations, the company benefits from access to alternative revenue streams, which act as a cushion against the cyclicality of the sugar business.'

Perspective

Following the rating upgrade, Mr. Vijay S. Banka, Managing Director, Dwarikesh Sugar Industries Limited said, "The rating upgrade is a recognition of Dwarikesh's cost-efficiencies, healthy cashflows and fiscal discipline. The rating upgrade will further enable to moderate our borrowing costs and reinforce our business sustainability."

Dwarikesh remains committed to the following elements of its strategy:

- Portfolio evolution: Dwarikesh will maximize the production of value-added products and moderate sugar output, strengthening business sustainability

- Enhancing efficiencies: Dwarikesh will make continuous enhancements in operating efficiencies, R&D and farmer engagement

- Cane development: Dwarikesh will continue to focus on sugar recovery across its mills arising out of a superior cane varietal mix (also generates higher farmer yields)

Shares of Dwarikesh Sugar Industries Limited was last trading in BSE at Rs. 88.95 as compared to the previous close of Rs. 90.95. The total number of shares traded during the day was 122316 in over 1247 trades.

The stock hit an intraday high of Rs. 91.65 and intraday low of 87.65. The net turnover during the day was Rs. 10865589.00.

Source : Equity Bulls

Keywords

DwarikeshSugarIndustries INE366A01041 RatingUpgrade LongTermRating BankLoanFacilities ICRA