Gayatri Projects tanks 11% to over four-year low on CARE Ratings' downgrade

The delay in servicing debt obligations, has resulted in a ratings downgrade by CARE to "D" from the earlier rating of "BB+", the rating agency said

Shares of Gayatri Projects plunged 11 per cent to Rs 86.95, an over four year low on the BSE on Monday, after Credit Analysis & Research (CARE) revised the ratings of long-term and short-term bank facilities to 'CARE D', due to delay in servicing debt obligations. The instruments with this rating are in default or are expected to be in default soon. The stock of the construction & engineering company traded at its lowest level since September 10, 2015.

“The revision in the ratings assigned to the bank facilities of Gayatri Projects is on account of stretched liquidity position of the company due to delays in receipt of receivables leading to cash flow mismatch resulting in delays in debt servicing,” CARE Ratings said in a press release.

“The company in line with its stated strategy is pursuing monetization of its stake in Sembcorp Energy India (SEIL). The stake sale was being undertaken to improve company's liquidity position; however, despite its best efforts, the Company was not able to fast track the same and as a result there was a delay in Company's debt service obligations,” Gayatri Projects said on a ratings downgrade.

Adding: "SEIL stake sale has now progressed significantly and the Company expects to close the said deal before the end of the current calendar year. Post the completion of the SEIL deal, GPL will be able to significantly de-leverage its balance sheet and overcome its temporary liquidity crunch."