India Ratings and Research (Ind-Ra) has upgraded I G Petrochemicals (IGPL) long-term issuer rating to 'A-’ from 'BBB+'. The outlook is stable.

The upgrade reflects IGPL's partial breach of the positive rating guidelines of net debt/EBITDA below 2.0x and FFO interest coverage above 3.5x in FY15. Net leverage has improved due to a reduction in total debt and an increase in EBITDA margins. The improvement in interest coverage would have been more if not for the increase in interest cost due to higher financial charges because of high bill discounting.

IGPL's EBITDA margin improved 165bp yoy to 6.7% in FY15 due to the capex completion and process improvement initiatives taken in FY14. However, there was high volatility in EBITDA margins during FY15 mainly due to falling crude oil prices. IGPL incurred an EBITDA loss in 3QFY15 on account of inventory write downs on ortho-oxylene. EBITDA margin increased to 16.9% in 4QFY15 because of stability in crude oil at lower prices.

Shares of the company gained Rs 3.4, or 2.89%, to trade at Rs 121.00. The total volume of shares traded was 165,038 at the BSE (3.20 p.m., Wednesday).