India Ratings upgrades Capacite Infraprojects to ‘IND A’/Stable
India Ratings and Research (Ind-Ra) has upgraded Capacit’e Infraprojects Limited’s (CIL) Long term issuer rating to ‘IND A’ from ‘IND A-‘ while resolving the Rating Watch Positive keeping the outlook stable.
The upgrade reflects an improvement in CIL’s liquidity, post successful completion of an INR4 billion initial public offering in September 2017. The company intends to utilise these proceeds for its working capital requirements and purchase of capital assets. As of December 2017, the company has around INR3 billion unencumbered cash reserves. The company’s cash conversion cycle increased marginally to 41 days in FY17 (FY16: 36 days), while it utilised an average of around 73% of its fund-based limits for the 12 months ended November 2017. However, the management expects the utilisation levels to reduce over the medium term on the back of an improvement in overall liquidity as a result of the initial public offering.
CIL’s net financial leverage (total debt less unrestricted cash) improved to 0.9x in FY17 (FY16: 1.5x), driven by lower debt obligations, while EBITDA/net interest was at 3.8x (3.6x). The company’s revenue increased to INR11,570 million in FY17 (FY16: INR8,533 million), while its EBITDA increased to INR1,580 million (INR1,147 million) on account of the successful execution of the order book. CIL’s EBITDA margin improved to 13.7% in FY17 (FY16: 13.4%) on the back of an increase in higher-margin projects in the company’s order book.