India Ratings upgrades Indo Rama Synthetics to 'IND A-'/Stable

India Ratings and Research (Ind-Ra) has upgraded Indo Rama Synthetics (India)'s (IRSL) Long-Term Issuer Rating to 'IND A-' from 'IND BBB+' while the outlook remains stable.

The ratings on IRSL's working capital facilities worth Rs 1105 crore have been upgraded to IND A-/Stable/IND A2+. The ratings on term loans worth Rs 294 crore have been upgraded to IND A-/Stable.

Ind-Ra said it continues to take a consolidated approach of IRSL and its two 100% subsidiaries, Indo RamaYarns and Indo Rama Venture Yarn. The ratings also continue to factor in the moderate-to-strong operational, financial and strategic linkages between IRSL and its parent, Indo Rama Ventures Public Company.

The upgrade reflects the improvement in IRSL's operational performance during 9MFY22, and Ind-Ra's expectation that the capacity utilisation of the four operational continuous polymerisation (CP) plants improved in 4QFY22 (above 80%) would continue to remain high over the long term. The fifth CP plant, and its likely commissioning by FY23-FY24, would aid in the production of bottle grade pet resin, thereby improving the value addition. Additionally, in FY24, the business profile is likely to undergo a change post the completion of the capex on the downstream value-added drawn texturised yarn facilities which would ensure a greater proportion of low-value added partially oriented yarn being consumed captively, leading to a higher value addition overall. The abovementioned changes will help strengthen IRSL's business profile and reduce margin volatility over the long term, Ind-Ra said in its release.

IRSL manufactures a wide range of polyester products including polyester staple fiber, partially oriented yarn, draw texturised yarn, fully drawn yarn and polyester chips.

On a consolidated basis, net profit of IRSL rose 25.25% to Rs 95.40 crore on 77.34% rise in net sales to Rs 1099.16 crore in Q3 December 2021 over Q3 December 2020.

Shares of IRSL rose 2.60% to settle at Rs 67.20 on Friday, 11 March 2022.

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