The rating upgrade will help reduce Gravita India's interest costs on borrowings by 6 percent, says company CEO Naveen Sharma.
Gravita India on Thursday received a rating upgrade from CARE Ratings based on improved scale of operations and continuous business performance.
The rating upgrade will help reduce the company's interest costs on borrowings by 6 percent. Currently, it pays Rs 3 crore per quarter as interest cost, says Naveen Sharma, CEO of Gravita India.
Owing to these reasons, he expects margins to expand from Q4FY15. However, its revenue growth is anticipated to be 10-15 percent in FY15 as against targeted 25-30 percent, he added.
Below is the verbatim transcript of the interview:
Ekta: Can you just tell us what your debt figures were and whether you have managed to reduce your debt figures and how much do you think your cost of funds will possibly come down because of this Care Rating upgrade that is come through?
A: Our total debt figure is around Rs 90 crore and we expect with this rating there is a one notch improvement in short-term and long-term ratings. We expect a six percent cost reduction in our financial cost.
Sonia: What is the absolute interest cost that you pay every quarter and how much do you expect it to go down by?
A: It is around Rs 3 to 4 crore per quarter.
Ekta: It will reduce by how much?
A: The total out go towards interest will reduce by six percent of the total interest out go.
Ekta: Do you have plans of reducing your total net debt?
A: Our debt is mainly working capital from the banks. There is not much debt it is around Rs 8-10 crore only mostly it is working capital requirement.
Sonia: What about your exports you were looking at improving your exports from this 55 percent of overall revenues? How much do you think you can scale it up to by the end of say FY16?
A: The exports generally are good in first two quarters rather two and a half quarters. From the fourth quarter onwards there will be more on the domestic market because the local markets will be having heavy demand from the battery sectors which is required for your uninterruptible power supply (UPS) and inverter segment in summers to come. So, there will be a more activity in domestic market in Q4 because there will be a price arbitrage as well.
Ekta: The last time you spoke to us in November you had indicated that may be operating margins would be better on the second half as opposed to the first half, is that playing out for you all and what would be the improvement in basis points if you could relay that for us?
A: That will be mainly favourable in our quarter IV and just as I mentioned it should be somewhere around 5 to 6 percent.
Gravita India stock price
On January 09, 2015, at 14:13 hrs Gravita India was quoting at Rs 62.50, down Rs 1.95, or 3.03 percent. The 52-week high of the share was Rs 97.05 and the 52-week low was Rs 33.00.
The company's trailing 12-month (TTM) EPS was at Rs 2.38 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 26.26. The latest book value of the company is Rs 12.66 per share. At current value, the price-to-book value of the company is 4.94.
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