Acuité has upgraded the long-term rating to 'ACUITE BBB' (read as ACUITE triple B) from 'ACUITE BBB-' (read as ACUITE t riple B minus) and short-term rating to 'ACUITE A3+' (read as ACUITE A three plus) from ACUITE A3' (read as ACUITE A three) on the Rs. 196.00 Cr bank facilities of Mafatlal Industries Limited (MIL). The outlook is revised from 'Positive'. to 'Stable'.
The rating upgrade is majorly on account of growth in the business risk profile of the company marked by improvement in operating performance, improvement in liquidity profile on the back of successful monetization of non-core assets and adoption of Asset Light Business Model. The operating performance of the company have witnessed continuous improvement during FY22 and 9MFY23. The company reported growth of ~62% YoY in operating income to Rs.996.81 Cr. in FY22 as against Rs.615.51 Cr. in FY21. Furthermore, the revenue from operations of the company improved ~69% YoY during 9MFY23 to Rs. 1019.06 Cr. as against Rs.604.76 Cr. in 9MFY22. The operating profit margin of the company also improved to 5.22% in 9MFY23 from 2.25% in FY22 and (5.52)% in FY21. Further, the rating also draws comfort from MIL's comfortable capital structure and monetizable assets in form of unencumbered shares of NOCIL Limited. The rating is however constrained by working capital intensive nature of operations of the company albeit comfortable coverage indicators and exposure to intense competition in a fragmented industry.