India Ratings & Research has affirmed the long-term issuer rating at 'AA-' to Tata Projects Ltd, indicating high degree of financial strength.
"India Ratings & Research (Ind-Ra) has affirmed Tata Projects Ltd's (TPL) Long-Term Issuer Rating at IND AA-. The Outlook is Stable," the rating agency said in a statement.
The rating affirmation reflects the recovery in TPL's EBITDA margins in FY14 to 6.3 per cent on a rise in margins from the power generation segment and the execution of high margin projects of other strategic business units, it said.
Liquidity continues to be stable with cash and cash equivalent of Rs 1.8 billion at FY'14, it said.
"Even though TPL's net leverage turned positive...In FY14, driven mainly by a rise in its working capital requirements, it remained within Ind-Ra's negative trigger of 3.0x and hence does not warrant a rating action," it said.
However, Ind-Ra expects the net leverage to remain at elevated levels in FY15 due to higher working capital requirements on increased scale of operations, the agency said.
Although TPL's order book concentration reduced in FY14, its revenue visibility decreased too. The top three customers now constitute about 51 per cent of the order book due to a change in the scope of one of its key orders, it said.
