CARE reaffirms ratings of The Waterbase Ltd

The credit rating agency, CARE Ratings Limited ('CARE'), has reviewed and re-affirmed the credit ratings for The Waterbase Limited's banking facilities.

Long-term / Short-term (LT/ST) Bank Facilities - Rs. 73.81 crore - CARE A-; Stable/CARE A2+ (Single A Minus; Outlook: Stable/A Two Plus)

Short-term Bank Facilities - Rs. 0.03 crore - CARE A2+ (A Two Plus)

The ratings assigned to the bank facilities of The Waterbase Limited (TWL) continue to draw strength from the experience of its promoters with long track record of operations of the company in the shrimp feed industry and it being a part of the Karam Chand Thapar (KCT) group. The ratings also factor the partially integrated nature of its operations with an established brand presence and marketing network. Further, the ratings derive strength from its robust capital structure with negligible debt level outstanding as on March 31, 2021 along with its adequate liquidity. Additionally, the ratings take cognizance of the initiatives taken by the company for diversification of its revenue by venturing into farm care products and frozen sea food, the contribution of which to total operating income (TOI) has been gradually increasing.

The ratings are, however, tempered by the significant decline in its TOI and profitability during FY21 (refers to the period April 1 to March 31) due to the impact of COVID-19 pandemic on its demand, increase in its raw material costs and provision for doubtful debtors. While the company has again reported significant increase in its TOI in Q1FY22 as compared with Q1FY21, the profitability margin has remained impacted due to the increase in raw material costs which is expected to result in continued subdued profitability even in FY22. Nevertheless, the debt protection metrics continue to remain adequate with significant reduction in debt levels. Further, the operations of the company remain working capital intensive with significant funds blocked in debtors and inventory resulting in an elongated operating cycle of 158 days in FY21. The ratings are also constrained by its moderate capacity utilisation, exposure to volatility in raw material prices, geographical concentration of revenue and risks inherent to the seafood industry.

The ratings also take note of the capital expenditure plans of the company for expansion in capacity and process improvement which is expected to be funded out of internal cash accruals and liquid investments.

Shares of Waterbase Limited was last trading in BSE at Rs. 117.55 as compared to the previous close of Rs. 120.50. The total number of shares traded during the day was 35007 in over 1361 trades.

The stock hit an intraday high of Rs. 122.00 and intraday low of 116.95. The net turnover during the day was Rs. 4198830.00.

Source : Equity Bulls

Keywords

Waterbase INE054C01015 WATERBASE FoodProducts RatingUpdate Reaffirmed