CRISIL has assigned its 'AA/Stable' rating to the Rs 1,500 million non-convertible debenture issue of Tube Investments of India (TI), while reaffirming its rating on TI's other bank facilities and debt programmes at 'AA/Stable/A1+'. CRISIL has also withdrawn its ratings on TI's non-convertible debenture issue of Rs 1,000 million as the instrument has been fully redeemed.

CRISIL's ratings continue to reflect TI's healthy business risk profile, marked by its diversified revenue streams and leading market position in most of its businesses. The ratings are also supported by TI's adequate financial profile and the healthy financial flexibility enjoyed by TI, which is one of the leading companies of the Murugappa group. These rating strengths are partially offset by vulnerability of the company's profitability to intense competition and cyclical slowdown in the automobile sector. Furthermore, a large proportion of TI's capital employed is deployed in investments, which are not providing adequate returns.

CRISIL believes that TI's overall credit profile will continue to benefit from its well-diversified revenue profile, and the intent of the management to maintain a prudent financial policy. The outlook may be revised to 'Positive' if TI substantially scales up operations at its gears and large diameter tubes facilities, while successfully implementing the deleveraging plans, leading to improvement in its key credit metrics. Conversely, the outlook may be revised to 'Negative' in case of lower-than-expected cash generation or continued elongation of its working capital cycle, leading to delay in correction in TI's debt protection metrics.

Shares of the company declined Rs 1.65, or 0.47%, to trade at Rs 350.90. The total volume of shares traded was 11,334 at the BSE (2.22 p.m., Tuesday).