The credit rating agency upgraded the ratings on Mukand's fixed deposit worth Rs 120.48 crore to "ACUITE FA/ Outlook: Stable" from "FBB/Negative".
It also upgraded the ratings on the company's bank facilities worth Rs 1,045.48 crore. AcuitRatings upgraded the company's long-term rating to ACUITE BBB-/ Outlook: Stable from ACUITE BB/Negative. It revised the company's short-term rating to ACUITE A3 from ACUITE A4+.
The ratings agency said that the rating upgrade and revision in the outlook from 'Negative' to 'Stable' is driven by the company's significant progress in land parcel monetization and disinvestment in a joint venture company while utilizing the proceeds to repay the outstanding debt from lenders and group companies, thereby improving on the financial risk profile.
The company has received an approximately Rs 1,510 crore through these transactions during FY2021 and reduced debt to a major extent which is also expected to reduce the interest burden.
Acuitbelieves that the monetization transactions will not only strengthen the overall capital structure and the liquidity position of the company but also lead to an uptick in net profitability levels going forward.
Further, there is a significant likelihood of the completion of a second phase of the monetization plans in FY2022 which should reduce the debt further and support the working capital requirement of the company.
Mukand is engaged in manufacture of alloy and stainless-steel long products. The company reported consolidated net profit of Rs 64.53 crore in Q3 FY21 as against a net loss of Rs 66.05 crore in Q3 FY20. Net sales during the quarter rose 23.47% YoY to Rs 797.84 crore.
The scrip jumped 4.79% to end at Rs 89.75 on the BSE on Tuesday (13 April 2021).
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