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Pratibha tanks 5.1% after CRISIL downgrades credit rating

The ratings firm downgraded Pratibha’s long term rating from BBB/Negative to BB+/Negative and short term rating from A4+ to A3+.

The News International Team

Shares in Pratibha Industries  fell 5.1 percent in early trade Wednesday after ratings firm CRISIL downgraded the credit rating on both its short- and long-term loans.

The ratings firm downgraded Pratibha’s long term rating from BBB/Negative to BB+/Negative and short term rating from A4+ to A3+.

“The rating downgrade reflects the expectation of continuing pressure on the Pratibha Industries group’s financial risk profile, even after taking into account the group’s deleveraging plans in the near to medium term,” CRISIL said in a note. “The group’s financial risk profile is marked by substantially high gearing and modest debt protection metrics.”

In the most recent quarter, Mumbai-based Pratibha, which operates in the infrastructure space, clocked profit after tax of Rs 10.08 crore on sales of Rs 720.5 crore. But it was bogged down by the total debt on its books, with non-current liabilities of Rs 993 crore and current liabilities of Rs 3,318 crore.

Reacting to the downgrade, Pratibha CEO Yogen Lal told CNBC-TV18 the company had not seen any stress or delay in servicing its debt. The company’s quarterly interest outgo stood at Rs 65-70 crore and was looking to reduce its debt by Rs 200-300 crore in the next calendar year by monetizing its assets, he added.

But CRISIL said that even with sale of its assets or through equity dilution, the improvement in the group’s capital structure would be gradual.

“The success of this plan will hinge on the extent of improvement in the external environment. CRISIL believes that the improvement in the group’s capital structure will be gradual, given its large working capital requirements; and hence the group’s gearing and debt protection metrics will remain modest in the near to medium term,” the ratings firm noted.

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