ICRA Upgrades Bhoomi Textiles Rating to BBB+ on Improved Financial Performance

Strategic Insights -

ICRA, a rating agency, has upgraded the long-term rating of Bhoomi Textiles from BBB to BBB+ on improved financial performance. The upgrade factors in the company's healthy revenue growth in FY14 and current fiscal, comfortable coverage indicators, and better working capital management. Bhoomi Textiles, a partnership concern, has reported an operating income of Rs. 55.49 crore and profit after tax of Rs. 1.89 crore in FY 2014, as against Rs. 31.88 crore and Rs. 1.01 crore in FY 2013.

Key Takeaways:

  • ICRA has upgraded the long-term rating of Bhoomi Textiles to BBB+ from BBB on improved financial performance.
  • The upgrade factors in the company's healthy revenue growth in FY14 and current fiscal, comfortable coverage indicators, and better working capital management.
  • Bhoomi Textiles reported an operating income of Rs. 55.49 crore and profit after tax of Rs. 1.89 crore in FY 2014, as against Rs. 31.88 crore and Rs. 1.01 crore in FY 2013.
  • Bhoomi Textiles has a strong business and financial inter-linkages with its group concern, Raj Exports, which is an exporter of knitted garments.
  • The company's ratings remain constrained by its small-scale operations in the highly fragmented fabric processing industry and vulnerability to adverse fluctuations in prices of key raw materials.
  • Bhoomi Textiles is managed by three partners - Mr. Yugesh Shah, Mr. Shirish Shah, and Mr. Niraj Shah - and has an associate concern, Raj Exports.

Statistics:

  • Operating income of Rs. 55.49 crore and profit after tax of Rs. 1.89 crore in FY 2014.
  • Operating income of Rs. 31.88 crore and profit after tax of Rs. 1.01 crore in FY 2013.
  • Unaudited provisional financials for 8M FY 2015 report operating income of Rs. 47.87 crore and profit after tax of Rs. 2.93 crore.

Sources:

  • ICRA Limited, 'Bhoomi Textiles', rating report, March 2015, ICRA website: http://www.icra.in/
  • ICRA ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments. ICRA ratings are subject to a process of surveillance, which may lead to revision in ratings.
  • ICRA, http://www.icra.in/, telephone: +91 22 30470050.