CARE reaffirms ratings of Vindhya Telelinks Limited

CARE Ratings Limited ("Credit Rating Agency") has Reaffirmed the rating at "CARE A+; Stable" in respect of Long-term bank facilities for Rs. 1,174.87 Crores and "CARE A1+" in respect of Short-term bank facilities for Rs. 2,518.75 Crores.

Further, the Credit Rating Agency has withdrawn the rating to the Non-convertible Debentures (NCDs) issue of Rs. 50.00 Crores, as the same has been fully redeemed.

The reaffirmation of the ratings assigned to the bank facilities of Vindhya Telelinks Limited (VTL) continues to derive strength from the well-established, resourceful and experienced promoter group with demonstrated financial support to the company and its diversified product portfolio catering to the telecom, power distribution, and solar energy sectors with a strong market position in the supply of optical fibre cables (OFCs) to the telecom sector. The ratings also factor in the healthy order book position of the company strengthened by the large State Water Sanitation Mission (SWSM) order from the Uttar Pradesh State Government; VTL's satisfactory, albeit moderate financial risk profile, characterised by moderate gearing and debt coverage metrics; and its adequate liquidity position. The ratings also take cognisance of the improved operational performance of the company in H1FY23 (UA) on the back of a recovery in demand witnessed in the engineering, procurement and construction (EPC) business after a muted performance in the past couple of years.

The ratings strengths are, however, tempered by the company's large working capital requirements being met through both, fund-based and non-fund-based limits, attributable to the inherently working capital-intensive operations due to the elongated collection cycle (although expected to improve, going forward) and the substantial inventory holdings in the EPC segment, the inherent risk associated with large and tender-based orders, the susceptibility to volatile raw material prices and the prevalent competition in the EPC as well as cables businesses. CARE Ratings Limited (CARE Ratings) believes that the company's working capital cycle, which was stretched over the past two years amid the COVID-induced disruptions, especially in the EPC business, is expected to be rationalised during the current fiscal on the expectation of higher income and better collections, which will be critical for the company's credit profile and will remain a key rating monitorable.

Shares of Vindhya Telelinks Limited was last trading in BSE at Rs. 1649.55 as compared to the previous close of Rs. 1679.50. The total number of shares traded during the day was 1152 in over 483 trades.

The stock hit an intraday high of Rs. 1710.00 and intraday low of 1639.85. The net turnover during the day was Rs. 1919977.00.

Source : Equity Bulls

Keywords

VindhyaTelelinks INE707A01012 RatingUpdate Reaffirmed BankFacilities