Motilal Oswal
    NIFTY 50
Motilal Oswal

Here's why India Ratings cut Eveready’s long-term credit rating

Updated : May 02, 2019 09:09 PM IST

Sharing the rationale behind the downgrading of Eveready’s long-term credit, Richa Bulani, senior analyst, India Ratings, said that the leverage continued to remain at high levels for the company in FY19.

"The management had plans to deleverage by selling idle land and expected to receive back the support they had extended to group companies, which did not come through," said Bulani.

"So, delay in asset monetisation plans of Eveready is a key cause of concern, and so the stock is on negative watch," Bulani added.

However, this year the company plans to raise Rs 175 crore through sale of the land asset. "The company has received a part of the proceeds from the sale of one land asset in FY19 and some part is expected in FY20," said Bulani, adding that the entire amount raised will be used to repay debt.

“Rating watch negative implies that rating could be downgraded or could be affirmed,” she said, adding that in next few months, they do not see ratings upgraded.
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