CRISIL said that the rating upgrade reflects the improved business risk profile of the company owing to growth in revenue at compound annual rate of 9% during the four fiscals through 2023 and operating margin of more than 11%.

Orders of Rs 2,990.8 crore as on 31 December 2023 (3.7 times of fiscal 2023 revenue), along with revival in profitability from the concrete sleeper division, strengthen the business risk profile. Streamlined project execution and improvement in realisations led to reduction in unbilled revenue exposure as on 31 December 2023.

This has led to improved working capital cycle, with expected gross current assets (GCAs) at less than 200 days as on March 31, 2024 (292 days as on March 31, 2021).

High interest-bearing working capital limit and its utilisation has reduced, which resulted in reduced interest outgo during the nine months of fiscal 2024. This is likely to strengthen the debt protection metrics, with interest coverage ratio more than 4 times in fiscal 2024 (2.5 times in fiscal 2023).

Sustenance of improvement in the business risk profile and working capital cycle will remain a key rating sensitivity factor.

The ratings reflect the extensive experience of the promoters in the civil construction business, and the strong project execution capabilities, healthy order pipeline and moderate financial risk profile of the company.

These strengths are partially offset by large working capital requirement and susceptibility to risks inherent in tender-based business.

GPT Infraprojects is the flagship company of the GPT group, which undertakes civil infrastructure projects and manufactures concrete sleepers and iron castings for railways and healthcare sectors.

The scrip fell 1.22% to currently trade at Rs 181.50 on the BSE.