Eurolife Healthcare Private Limited Receives Rating Upgrade from ICRA

Strategic Insights -

Eurolife Healthcare Private Limited has received a rating upgrade from ICRA, a leading credit rating agency in India. The company's long-term loans of Rs. 42.7 crore have been enhanced from Rs. 19.73 crore, with ICRA reaffirming the rating at [ICRA]BBB-(stable). Additionally, the company's short-term ratings for its fund-based and non-fund based bank facilities have been reaffirmed at [ICRA]A3. The rating upgrade is attributed to Eurolife's improved operating profitability and debt protection metrics, driven by its shift towards higher own manufacturing mix from trading earlier. The company has also seen increased capacity utilization for its 500ml LVP units since January 2015, which is expected to support profitability in the future.

Key Takeaways:

  • Eurolife Healthcare Private Limited's long-term loans have been increased to Rs. 42.7 crore from Rs. 19.73 crore, with ICRA reaffirming the rating at [ICRA]BBB-(stable).
  • The company's short-term ratings for its fund-based and non-fund based bank facilities have been reaffirmed at [ICRA]A3.
  • Eurolife's improved operating profitability and debt protection metrics are driven by its shift towards higher own manufacturing mix from trading earlier.
  • The company has seen increased capacity utilization for its 500ml LVP units since January 2015, which is expected to support profitability in the future.
  • Eurolife enjoys excise duty and income tax exemptions at its manufacturing facilities in Uttarakhand, which remains a key growth driver for the company.
  • The company's ratings continue to factor in its reputed customer base in the domestic market, established relationships with customers in export markets, and experience of promoters in the business.
  • However, the company faces competing risks, including delay in commercialization of one of its 500 ml LVP units, low capacity utilization of the second 500 ml LVP unit, and ongoing large debt-funded capital expenditure.

Statistics:

  • Eurolife's long-term loans have increased from Rs. 19.73 crore to Rs. 42.7 crore.
  • ICRA has reaffirmed the rating on the company's Rs. 6.5 crore long-term bank facilities at [ICRA]BBB-(stable).
  • The company's short-term ratings for its fund-based and non-fund based bank facilities have been reaffirmed at [ICRA]A3.
  • Eurolife has seen a 114% increase in profit after tax from Rs. 4.0 crore in FY 2013 to Rs. 5.1 crore in FY 2014.
  • The company's operating income has increased from Rs. 65.3 crore in FY 2013 to Rs. 70.0 crore in FY 2014.

Sources:

  • ICRA, "Eurolife Healthcare Private Limited Instrument Amount Amount Outstanding In Crore In Crore Long-term Loans 42.70 (enhanced from 19.73) [ICRA]BBB-(stable) reaffirmed"
  • Eurolife Healthcare Private Limited, "Company Profile"
  • ICRA, "Rating Upgrade"