ICRA Lanka Limited, subsidiary of ICRA Limited, a group company of Moody’s Investors Service has revised the issuer rating of Dunamis Capital PLC (DCP) to [SL]BBB (pronounced SL triple B) with Stable outlook from [SL ]BBB+ (pronounced SL triple B plus) with stable outlook. ICRA Lanka also revised the issue ratings of the two Rs 1 bn Senior Unsecured Redeemable Debenture programmes each, totaling Rs 2 Bn to [SL]BBB (pronounced SL triple B) with Stable outlook from [SL] BBB+ (pronounced SL triple B plus) with Stable outlook.
The revisions in the ratings factor in the depletion in DCP’s core-capital base because of the impairment losses of its subsidiary, namely Premier Synthetic Leather Manufacturers (Private) Limited (PRIMO). Consequently, the standalone market value based gearing (debt/fair value based net worth) increased to high levels of 4.68 times as in March 2017 as compared with 2.14 times as in March 2016. ICRA Lanka also takes note of increase in finance cost of the company, on account of the leverage which coupled with the Impairment losses impacted its overall profitability in FY2017 (net loss on a stand-alone basis for FY2017 was LICK 627 mn vis-a-vis the loss of I.KR 44 mn in FY2016). ICRA Lanka expects the standalone profitability to remain under pressure till the leverage is brought down to reasonable levels. The ratings continue to factor in DCP’s status as the holding company of First Capital Holdings PLC (FCH; issuer rating of [SL]A- with stable outlook).
Add new comment