India Ratings and Research (Ind-Ra) has upgraded SRS long-term issuer rating to 'A-' from 'BBB'. The outlook is stable.

SRS' revenue grew 17% yoy in 9MFY15 to Rs 28,237 million with EBITDA margins improving to 3.6%, driven by the improved performance of its jewellery business. Ind-Ra expects the margins to improve further driven by the company's increased focus on the higher-margin retail jewellery business. Also, the agency expects the procurement of gold from Produits Artistiques Métaux Précieux as well as the availability of gold-on-lease schemes to favourably impact the company's procurement and financing costs.

The reintroduction of the low-cost gold on lease scheme and the relaxation of restrictions on gold import by the government are likely to support the jewellery industry. Ind-Ra therefore expects the company's moderate credit profile to improve over the medium term, driven by an improvement in EBITDA margins and lower cost of financing. The agency expects SRS' interest coverage (operating EBITDA/gross interest expense) and net financial leverage for FY15 to be in range of 2.1x-2.5x and 4.0x-4.4x, respectively. The company's net financial leverage was 4.0x (6.2x) while interest coverage was 2.1x in FY14 (1.9x).

SRS is part of the larger SRS group and has access to group's resources. SRS itself has presence across several businesses such as multiplex, retail and jewellery. These diversified businesses help the company cross sell. The company has a moderate brand recall among retail customers in National Capital Region and leverages the group's strong brand awareness in the Faridabad region.

Shares of the company gained Rs 0.8, or 4%, to trade at Rs 20.80. The total volume of shares traded was 43,528 at the BSE (11.12 a.m., Friday).