I G Petro up on credit upgrade

Organic chemicals maker IG Petrochemicals is up 3% at Rs. 122.70, in an absolutely flat market. Volumes on the counter are also strong; nearly 1.2 lakh shares exchanging hands on both the exchanges, since morning.  

After reporting healthy number for Q1FY16 last Friday, this market leader in Phthalic Anhydride (PAN) has seen a rating upgrade from India Ratings. Its long term borrowings, which stood at Rs. 108 crore as of 31-3-15, have been upgraded one notch to IND A-, from IND BBB+ earlier. Short term borrowings of Rs. 23 crore as of 31-3-15, too, have been rated upwards to IND A1, from IND A2+. Better ratings helps lower interest cost for the company coupled with ease in future fund raising via debt.

For Q1FY16, company reported revenues of Rs. 284 crore and operating profit of Rs. 43 crore, thanks to lower material costs and reduced finance expense to Rs. 7 crore, versus Rs. 9 crore and Rs. 10 crore in Q4FY15 and Q1FY15 respectively. Net profit stood at Rs. 29 crore, leading to 10% net margin, resulting in first quarter EPS of Rs. 9.51 in relation to FY15 EPS of Rs. 10.51. With current market cap of Rs. 379 crore, company has annual net profit run-rate of Rs. 116 crore, indicating a PE multiple of just 3.3 times.