Brickwork assigns A1-plus rating to Titan's proposed commercial paper

Brickwork credit rating agency has assigned A1-plus rating to Tata enterprise Titan's bank loan facilities of Rs 5,000 crore and proposed commercial paper of Rs 900 crore.

Titan proposes to issue commercial paper to meet its working capital requirements and also to take advantage of lower interest rates. The commercial paper issues are proposed to be unsecured and expected to have a tenure of 7 to 365 days.

Brickwork said the ratings continue to draw strength from the strong parentage and support of the Tata group and Tamil Nadu Industrial Development Corporation (TIDCO), established brand equity, experienced and professional management, robust financial risk profile supported by the company's consistent performance, comfortable liquidity, sound capital structure and absence of long-term debt, strong financial flexibility and prudent financial and risk management practices.

The rating further positively factors the revenue growth of 8 per cent in its jewellery and watches segment and growth of 14 per cent and 68 per cent in the eye wear segment and Caratlane respectively during 9M FY20 over the corresponding period in previous year.

The company also has leadership position in the orgsed jewellery, watches and eye wear segments. The rating strengths are partially offset by exposure to regulatory interventions and gold price volatility, which impact the demand-supply scenario in the intensely competitive retail jewellery industry and the pressure on margins in the watches segment.

Brickwork said it has taken note of the company's downward revision of its estimated top line growth to 11 to 13 per cent for FY20 in view of the challenging market conditions. The company's growth rate moderated during 9M FY20 on account of volatility in gold prices, a slowdown in consumption and subdued demand.

The top line was further impacted in Q4 FY20 on account of COVID-19-led lockdowns, the closure of retail stores and decline in footfalls and overall business.

In the financial year ended March 2019, Titan clocked profit after tax of Rs 1,374 crore on a revenue of Rs 19,070 crore with a tangible net worth of Rs 6,143 crore.

( With inputs from ANI )