Surya Roshni shares rise 7% on rating upgrades, stable outlook

CARE Ratings upgraded ratings of the company's short-term bank facilities and commercial paper with reaffirmation of long term bank facilities

Surya Roshni shares, on Thursday, advanced 7 per cent intra-day to Rs 345 on the BSE on the back of heavy volumes after CARE Ratings upgraded the ratings of the company’s the short term bank facilities and commercial paper with reaffirmation of long-term bank facilities.

At 10:52 am, the stock was trading 6 per cent higher at Rs 342, as compared to 0.29 per cent gain in the S&P BSE Sensex. A combined 270,000 equity shares were changing hands on the counter on the NSE and BSE. The stock hit a 52-week high of Rs 385 on December 23, 2020.

Surya Roshni said the rating upgradation of short term facilities are based on the improvement in the operational performance supported by favorable change in business dynamics in lighting division and higher contribution of value added products in steel pipes and strips division, thereby leading to better profitability and accruals and resultant improvement in debt metrics and liquidity position.

The ratings also favorably factored in consistent reduction in debt levels including prepayments in the current year culminating into reduced finance cost, benefits of imposition of custom duty on finished lighting products, deeper market penetration in rural and semi-urban markets with diversified product profile, nation-wide marketing network, established brand name, experienced management with overall synergy and greater integration, it said.

While announcing the December quarter (Q3FY21) results on January 27, 2021, Surya Roshni said the performance of both the segments viz. lightings & consumer durables and steel pipes & strips segment have been remarkable. On the back of the strong demand from rural and semi urban areas, festive season and supported by robust supply chain, the momentum gained earlier continued to be further strengthened in Q3FY21, leading to better sales across products at improved margins.

Considering the demand for Section Pipes, the company said it adding new capacity of 72,000 MTPA of Section Pipes (upto 300 X 300 mm) with Direct Forming Technology (DFT) at Gwalior unit at a capex of Rs 35 crore. The facility will be operationalised by the second quarter which will enable the company to improve value added offerings of large diameter pipes.