India Ratings & Research (Ind-Ra) has upgraded Genus Power Infrastructures (GPIL) long-term issuer rating to 'A' from 'A-'. The outlook is stable. GPIL's net adjusted financial leverage declined to 2.4x in FY14 (year end March) from 3.2x in FY13, due to higher EBITDA margins, lower working capital use because of an improvement in debtor days and repayment of long-term loans.
Ind-Ra expects the net adjusted leverage to moderate to 2.0x-2.2x in FY15, driven by EBITDA expansion and improved working capital cycle leading to lower working capital debt.
GPIL witnessed strong revenue growth in the meters segment, which grew 18% yoy in FY14 and at a CAGR of 21% over FY09-FY14. Ind-Ra expects the meters segment to continue to grow at 20% annually, in view of market shifting towards high-end meters such as pre-paid meters, meters with integrated communication, replacement demand of mechanical meters, old meters and higher electrification. The segment order book remains healthy with 35% yoy growth in FY14. The Rs 5 billion segment order book at end-August 2014 (book-to-bill ratio of 0.77x) and the annual manufacturing capacity of 6.5 million metres provide sufficient opportunity for the company to grow its revenue.
Ind-Ra expects a turnaround in the engineering construction and contracts (ECC) segment both in terms of a revenue pick up and an improvement in EBITDA margins. Till FY14, the management had been focusing on the completion of legacy orders in the segment, which resulted in a significant decline in revenue. FY15 is likely to see full completion of the remaining Rs 250 million of the legacy order book. During FY15, management expects revenue of nearly Rs 1.75 billion-Rs 2 billion from the segment, driven by an order book of Rs 3.6 billion at end-August 2014. Unlike FY08-FY11, GPIL is not looking at building an order book, but is more focused on executing orders profitably and within timelines.
Shares of the company gained Rs 0.1, or 0.41%, to trade at Rs 24.50. The total volume of shares traded was 175,281 at the BSE (3.17 p.m., Monday).
