Balrampur Chini extends gain as Icra reaffirms rating; soars 74% in 9 days

While the current lockdown is likely to result in some slowdown in demand from institutional customers, a significant impact on the operating performance appears unlikely, the rating agency said.

Shares of Balrampur Chini Mills (BCML) were locked at the 5 per cent upper circuit for the nine straight day, at Rs 126.40, on the National Stock Exchange (NSE) on Wednesday after the credit rating agency Icra re-affirmed the credit ratings for both long-term and short-term. The outlook on the long term rating remained stable.

While, the current lockdown is likely to result in some slowdown in demand from institutional customers, a significant impact on the operating performance appears unlikely, according to rating agency.

Till 01:26 pm, a combined 510,000 equity shares changed hands and there were pending buy orders for 13,000 shares on the NSE and BSE.

In the past nine trading days, the stock has rallied 74 per cent from the level of Rs 72.75 on March 24, as against a 13 per cent rise in the Nifty 50 index during the same period. The stock hit a multi-year low of Rs 68.95 on March 24 in the intra-day trade, and has corrected 65 per cent from its 52-week high level of Rs 195 hit on January 7.

"The rating action factors in BCML’s integrated nature of operations and a comfortable financial risk profile, as reflected by a conservative capital structure, strong financial flexibility and healthy debt coverage indicators with long-term debt to OPBDITA (operating profit before depreciation, interest, tax and amortization) of 0.79 times (annualised) and interest cover of 9.4 times, respectively in first nine months April-December (9MFY2020)," the rating agency said in its rating rationale.

“While the expected lower power tariff impacted the profitability of the cogeneration division in FY2020, the overall operating profitability is likely to remain healthy, driven by firm sugar realisations, better performance of the distillery segment as well as announcement of export subsidy for SY2020,” it added.

Besides, on March 26, Balrampur Chini Mills had informed the stock exchanges that ICICI Bank had invested Rs 51.09 crore in Auxilo Finserve, an associate company, by way of subscription to its 34 million equity shares or 9.90 per cent stake, pursuant to the definitive agreements executed on March 25, 2020. Auxilo Finserve is a non-banking finance company (NBFC) engaged in the business of providing education loans and/or loans to educational institutions.