Kanpur Plastipack Ltd - Ratings downgraded to 'CRISIL BBB+ / Stable / CRISIL A2', withdrawn

CRISIL Ratings has downgraded its ratings on the bank facilities of Kanpur Plastipack Ltd (KPL) to 'CRISIL BBB+/Stable/CRISIL A2' from 'CRISIL A-/Stable/CRISIL A2+' and simultaneously withdrawn the ratings at the company's request and on receipt of a no-objection certificate from its banker. This is in line with the CRISIL Ratings policy on withdrawal of bank loan ratings.

The rating downgrade reflects the continuous deterioration in the business risk profile of KPL. Revenue declined to Rs 365 crore for the first nine months of fiscal 2023 from Rs 456 crore in the corresponding period of fiscal 2022 because of slow order flow from Brazil, which accounts for 25-30% of exports. The operating margin declined to 4.09% from 8.67% due to increase in raw material prices and utilisation of inventory procured at a higher cost. The revenue for fiscal 2023 is expected at Rs 510-520 crore.

The downgrade also factors in the weakening financial risk profile and liquidity due to continuous low profitability. While cash accrual may be insufficient to meet term debt obligation in fiscal 2023, timely receipt of state subsidy and cash reserve support the liquidity.

The ratings continue to consider the established market position of KPL and the extensive experience of its promoter in the packaging industry. The strengths are partially offset by exposure to intense competition in the packaging segment and limited diversification in revenue.

Shares of Kanpur Plastipack Limited was last trading in BSE at Rs. 78.44 as compared to the previous close of Rs. 79.47. The total number of shares traded during the day was 300 in over 25 trades.

The stock hit an intraday high of Rs. 79.00 and intraday low of 78.30. The net turnover during the day was Rs. 23552.00.

Source : Equity Bulls

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KanpurPlastipack INE694E01014 RatingUpdate Downgrade