Fitch Ratings has revised India-based Rain Cements Limited’s (RCL) Outlook to Stable from Negative. Its National Long-Term rating has been affirmed at ’Fitch A-(ind)’. A list additional rating actions is provided at the end of this commentary.
The Outlook revision and affirmation reflect RCL’s improved operating performance for the six months ended June 2011 (1H11) due to higher cement prices during the same period. Average realisation per tonne of around Rs. 3,874 in 1H11 compared with Rs. 3,138 in 2010 lead to an improvement in EBITDA margins to 26% from 12%.
Financial leverage (net debt/EBITDA) also improved to 1.8x from 3.3x. Fitch expects cement prices to remain stable at the current levels till end-2011, considering prices have remained around the same levels from July 2011 to October 2011.