The rating on short term bank facilities has been reaffirmed at 'CRISIL A1?.
CRISIL stated that the revision in outlook factors in the company?s healthy and improving business risk profile, supported by expectation of sustenance of growth in volume (nearly 15% during the nine months of current fiscal) over the medium term, while maintaining operating margin at 9-11%.
Steady improvement in product mix with greater share of the higher margin cross linked polyethylene compounds will support operating margins being held at these levels even if realisations remain at current low levels.
Revenue share of the high-margin polyethylene (PE) compound has been steadily increasing and currently forms approximately 86% of the total income, against 76% four years back. Furthermore, the company has started commercial production of halogen free flame retardant (HFFR) compounds, thereby supporting business risk profile.
The ratings also derive comfort from company?s healthy market position, wide product range, strong clientele, experienced management, and improving financial risk profile backed by robust capital structure and debt protection metrics.
These strengths are partially offset by exposure to intense competition in the compounds market, dependence on large players in the oil and gas industry for raw material, and susceptibility to sharp volatility in raw material prices and currency rates.
Ddev Plastiks Industries houses the polymer compounding business of the Kkalpana group. The company has a diverse product portfolio comprising PE compounds, PVC compounds, master batches, engineering plastics, and reprocessed compounds. Currently, the company has seven plants across West Bengal, Daman & Diu, Dadra & Nagar Haveli, and Noida and has aggregate installed capacity of 2,42,000 TPA.
The company's net profit surged 75.90% to Rs 40.07 crore despite a 15.45% decline in revenue to Rs 553.54 crore in Q3 FY24 over Q3 FY23.
The scrip had risen 0.74% to end at Rs 171.30 on the BSE on Thursday.
Domestic equity markets are shut today on account of Good Friday.
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