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Shares of Gati plunged 4 per cent on Tuesday to ₹39.35 on the BSE, as CARE Ratings revised its outlook negative from stable and additional pledging by one of its promoters. Shares of GATI closed 2.42 per cent lower at ₹40.30.
While re-affirming the long term bank facilities fixed deposits at BBB, CARE Ratings revised its outlook to negative. It also revised the short-term bank facility to A3 from A3+.
The revision assigned to the bank facilities of Gati takes into account marginal decline in revenue from operations along with deterioration in profitability margin, resultant reduction in gross cash accruals in the first quarter of current fiscal and significant dilution of promoters' shareholding, said CARE in a release.
The revenue from operations of Gati has witnessed marginal y-o-y growth of 3.38 per cent at ₹534.29 crore during FY19 (as against ₹516.79 crore in FY18). Further, revenue from operations has witnessed q-o-q decline by 7 per cent to ₹121.32 crore during the Q1-FY19.
“The ratings, however, derive strength from its experienced management, extensive support from its subsidiary companies for augmenting e-commerce division and favourable industry prospects,” it said. Ratings continue to remain tempered by customer concentration risk in e-commerce segment and presence of stiff competition from many unorganised players in the industry, CARE added.
The ability of company to improve its operational efficiency thereby garnering better profitibality margins and increase the scale of operations are the key ratings sensitivies, CARE further said. Promoter and promoter group holding in the company significantly declined to 14.38 per cent at the end of June 30, 2019, as against 20.87 per cent as of March end; they were holding 24.15 per cent at the end of December 2018.
The outlook may be revised to stable if the company is able to demonstrate improvement in its key financial indicators, the rating agency opined.
Meanwhile, in a separate notice to the exchanges, the company said that Manish Agarwal Benefit Trust has pledged 75,000 more shares with Smit Capital Services on August 16. Following the additional pledge, the total number of share encumbered stood at 1.25 lakh shares, which is 0.12 per cent of the total paid-up capital of the company.
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