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India Ratings and Research has upgraded Eveready Industries India Ltd’s (EIIL) long-term credit rating to ‘IND A+’ from ‘IND A-’. The agency viewed the company’s credit outlook as stable after its long-term loan reduced to Rs 85.76 crore from Rs 92.5 crore.
The upgrade follows EIIL’s ability in the recent quarters to increase battery prices while maintaining its volume growth. The company also leveraged the Eveready brand to sell its other products such as LED lights and rechargeable fans.
The company’s EBITDA margins improved to 10.4 per cent in the first nine months of 2014-15 from 7.9 per cent in 2013-14, the rating agency pointed out, owing to the periodic battery price hikes. Its annualised net adjusted leverage improved to 1.8x (FY14: 3x). The leverage is likely to reduce below 1.5x in FY16 on the back of a reduction in debt, funded by strong cash flows.
The rating agency underlined EIIL’s strong market position (market share of over 50 per cent in the batteries and over 75 per cent in the flashlight segment). The company’s total market share is far higher than that of its closest competitor, reflecting low competition risk, Ind Ra said.
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