CRISIL revises ratings on bank facilities of Inox Wind Ltd

CRISIL has downgraded its ratings on the bank facilities and commercial paper of Inox Wind Limited (IWL) to 'CRISIL BBB+ / Stable / CRISIL A2' from 'CRISIL A-/Stable/CRISIL A2+'.

The rating action reflects weakening of IWL's credit profile on account of sustained weak operating performance and average liquidity. IWL's performance was expected to improve in fiscal 2020 given its healthy order book. However, for the first 9 months of fiscal 2020, operating income declined 55% to Rs 571 crore from Rs 1,258 crore in the corresponding period of the previous fiscal. Furthermore, operating margin weakened to 9.5% from 14.7%. Working capital cycle remains stretched with consolidated receivables estimated over Rs 1,500 crore as on March 31, 2020. Liquidity remains average because of high utilisation of bank limits and minimal unencumbered cash and equivalent. Company's performance was impacted due to delay in execution as the availability of central grid evacuation infrastructure from Power Grid Corporation of India Ltd (PGCIL) was delayed.

IWL expects the operating performance to improve in fiscal 2021. It has started execution of a large order from Continuum Power Trading (TN) Pvt Ltd (Continuum). IWL plans to divest stake in a special purpose vehicle (SPV) holding 50 MW of ready-to-be-commissioned windfarms. The company is also looking to monetise stake in the operations and maintenance (O&M) business. These liquidity measures and other cost optimisation initiatives are likely to improve the cash accrual and liquidity. Furthermore, removal of ceiling tariffs under the reverse auction by Ministry of New and Renewable Energy (MNRE), which is applicable for new auctions, is expected to benefit the industry over the medium term.

The ratings reflect strong support from the Inox group and IWL's established market position as a leading wind turbine manufacturer. These strengths are constrained by large working capital requirement constraining liquidity and weaker-than-expected operating performance.

The ratings also factor in the moratorium availed by IWL on its bank facilities in accordance with the relief measures provided by the Reserve Bank of India on March 27, 2020.

Shares of Inox Wind Ltd was last trading in BSE at Rs.25.45 as compared to the previous close of Rs. 25.85. The total number of shares traded during the day was 3466 in over 22 trades.

The stock hit an intraday high of Rs. 27 and intraday low of 25.45. The net turnover during the day was Rs. 91467.

Source : Equity Bulls

Keywords