DCM Nouvelle Limited - Ratings downgraded to 'CRISIL BBB / Stable / CRISIL A3+'

CRISIL Ratings has downgraded its ratings on the bank facilities of DCM Nouvelle Limited (DNL) to 'CRISIL BBB / Stable / CRISIL A3+' from CRISIL BBB+ / Stable / CRISIL A2.

The downgrade reflects weakening of business risk profile of the company as due to moderation in cotton-yarn spread, operating profitability during April-Dec in the ongoing fiscal declined to 3.5%. Though operating profitability is expected to improve in last quarter of the fiscal and thereafter, its steady improvement, amid volatility related to cotton-yarn spread, will remain a key monitorable. Nevertheless, the operating profitability for fy23 shall half to around 5-6%, as against 11-12% estimated previously, hence leading to moderation in debt protection indicators too. Business risk profile remains partly aided by company's established market position and healthy scalability, estimated at Rs 780-800 crore for fy23; around Rs 630 crore reported till Dec-22.

Financial risk profile, especially liquidity, remains supported by pre-payment of entire long-term debt during fy23, cushion available in bank lines and sizeable networth aiding the capital structure. Absence of sizeable debt funded capital expenditure over the medium term, and expected business revival, will further aid the financial risk profile over the medium term as well.

The ratings continue to reflect the extensive experience of the promoter in the cotton industry, advantageous location of the unit, and comfortable financial risk profile. These strengths are partially offset by vulnerability to fluctuations in raw material prices and exposure to demand risks in key operating countries.

Shares of DCM Nouvelle Limited was last trading in BSE at Rs. 135.25 as compared to the previous close of Rs. 134.75. The total number of shares traded during the day was 2237 in over 32 trades.

The stock hit an intraday high of Rs. 136.75 and intraday low of 134.70. The net turnover during the day was Rs. 302856.00.

Source : Equity Bulls

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DCMNouvelle INE08KP01019 RatingUpdate Downgrade