New Delhi: Rating agency Crisil today revised upwards automaker Mahindra & Mahindra's rating outlook on expectation that the company's profitability will improve following the recent revival in demand.
"The outlook revision reflects Crisil's expectation that
M&M's profitability and cash accruals will improve following
the recent revival in demand for the company's core offerings,
utility vehicles (UVs) and pick ups," it said in a release.
Crisil has revised its rating outlook on M&M's long-term
bank facilities to stable from negative, while reaffirming the
rating at AA. The rating on the company's commercial paper and
short-term bank facilities has been reaffirmed at P1+.
AA are long-term ratings, one notch down than the highest
grade, that offers a high degree of safety with regards to
timely payment of financial obligations.
P1 is a highest short term rating.
The company posted better-than-expected cash accruals in
the first quarter of current fiscal, Crisil said.
"Success of the newly launched Xylo, along with the
continued healthy performance of Bolero in the rural and semi
-urban markets, resulted in a 36 per cent year-on-year growth
in UV and pick ups sales in terms of volumes for M&M during
the five months to August 2009," the rating agency added.
The industry's volume growth during the period was 11 per
cent.
Crisil expects M&M's growth momentum to sustain over the
medium term.
It added that the ratings continue to reflect M&M's
leadership in the Indian tractor and UV industry and its
considerable financial flexibility arising from the market
value of its investments.
Crisil has also revised upwards its rating outlook on M&M
Financial Services' debt programmes and bank facilities to
stable from Negative following a similar change in the rating
outlook of Mahindra Finance's parent, M&M.
Bureau Report
First Published: Monday, October 05, 2009, 21:16