Citing muted revenue and weak complete ace of the group’s genuine estate business, rating company ICRA has downgraded long-phrase ratings assigned to diversified company Shapoorji Pallonji’s Rs 18,500-crore fund-primarily based and non-fund primarily based financial institution services.
The company has downgraded the rating assigned to the Rs 18,500-crore fund-primarily based and non-fund primarily based financial institution services to AA from AA+ and has reaffirmed the quick-phrase rating at A1+.
It has also reaffirmed the quick-phrase rating of A1+ on the Rs two,500 crore commercial paper (CP) programme, it said in a statement issued on November 26.
“The rating has been downgraded on account of muted revenue and continued price stress, which has led to weak overall performance of the group’s genuine estate portfolio and slower-than-anticipated progress on asset monetisation,” ICRA said.
This, along with the funding support provided to the group and subsidiary businesses, mostly genuine estate SPVs, has resulted in an boost in the standalone borrowing levels, contrary to the agency’s expectations of a reduction.
Also, the debt availed by different SP group genuine estate entities for which Shapoorji Pallonji has extended debt services reserve account guarantee is exposed to refinancing dangers given that the projects would get time to produce commensurate income flows, it said.
Just lately, the business announced its ideas to increase close to USD one billion by bringing outdoors investors into its solar unit, as a part of its technique to lessen debt.
“With robust purchase inflows in the final two fiscals, the business had an purchase guide of Rs 36,000 crore as on September thirty, 2018. The effectively-diversified purchase guide across sectors, geographies and clientele supplies revenue visibility in the close to to medium phrase and lowers purchase guide concentration risk. It also supplies respectable revenue visibility in the medium phrase,” ICRA extra.