Dilip Buildcon shares in focus as India Ratings ups outlook to 'positive'

Shares of Dilip Buildcon Ltd were in focus on Wednesday morning after rating agency India Ratings revised its outlook on the civil construction company to 'positive' from 'negative' while maintaining its long-term issuer ratings on fund-based and non-fund based instruments to ‘IND A’. The outlook revision, India Ratings said, reflects an improvement in Dilip Buildcon's leverage and interest coverage ratio during H1FY24 and the agency’s expectation of its credit metrics. Besides, it said Dilip Buildcon's liquidity profile may remain comfortable over FY24-FY25, due to an improvement in working capital cycle with the release of its working capital lock-up.

India Ratings said it considered Dilip Buildcon's standalone financials while adjusting the outstanding debt of those special purpose vehicles for which a corporate guarantee has been provided by the company.

The agency continues to factor in the equity commitments of Dilip Buildcon under-construction hybrid annuity model (HAM)-based projects and mine developer and operator projects.

"The agency has factored in the removal of the CG for the assets whose divesture has been completed and the CG provided to the debt raised at DBL Infra Assets Private Limited (DIAPL; 100 per cent subsidiary of DBL) and DBL Infratech Private Limited to assess the overall adjusted debt levels. However, the CGs provided to DIAPL will fall off progressively upon the achievement of the commercial operations date of the respective underlying assets," India Ratings said.

The rating agency said Dilip Buildcon's liquidity may further be supported by the issuance of warrants. DBL is also entering into a strategic tie-up for selling a 26 per cent stake in the HAM assets, it cited.

"Furthermore, there has been no major development around the Central Bureau of Investigation's visit to DBL's premises and the residence of its executive director in Bhopal on 31 December 2021. DBL, in its public disclosure to the stock exchanges, had refuted all the charges and stated that the company’s executive director had been released from the custody of the investigating agency vide order dated 7 January 2022. Ind-Ra will continue to monitor the developments around the case and its impact on DBL’s credit risk profile," India Ratings said.

Also read: GIFT Nifty up 34 point: Asian markets, crude oil prices, dollar movement & more

Also read: Stock recommendations for November 22, 2023: Garden Reach Shipbuilders, HCL Tech, HDFC Life and Airtel