India Ratings and Research has revised Nila Infrastructures Limited’s Outlook to Negative from Stable while affirming its Long-Term Issuer Rating at ‘IND BBB’.
The Outlook revision reflects Ind-Ra’s expectation that Nila’s net leverage will remain high in FY17.
Nila’s net leverage deteriorated in FY16 due to an increase in the total debt to Rs. 1,555m because of land acquisition and increased working capital requirements. Ind-Ra had expected the leverage to improve as the company had raised Rs. 487.5m (and received Rs. 403.5m till January 2015) through a private placement, which was to be utilised towards debt repayment.
The EBITDA margins declined to 15% in FY16 from 18.3% in FY15 and 24.4% in FY14 due to the company’s higher focus on the low-margin infrastructure segment than on the real estate segment.
Nila’s average working capital utilisation was around 76% (including dropdown overdraft and line of credit) for the 15 months ended June 2016.
Nila had an unexecuted order book of Rs. 3,664.5m (2x FY16 revenue) for the infrastructure business segment at end-October 2016, to be executed over a period of three years. In addition, it has signed a memorandum of understanding with Kataria Group, Ahmedabad to jointly acquire land (through JV/associate) and develop industrial and logistics parks.