The credit rating agency has upgraded its rating on the long-term bank facilities of Uflex to ‘CRISIL AA-/Stable' from 'CRISIL A+/Stable'. The short-term rating has been upgraded to 'CRISIL A 1+' from 'CRISIL A1'.

CRISIL said that the upgrade is on account of higher-than-anticipated improvement in the business risk profile and the financial risk profiles of Uflex.

The improvement in the business risk profile is reflected in increase in the revenues, which was on account of higher volume and price rise. Operating margin has remained stable at 17-18% over the nine months through fiscal 2022 despite substantial increase in raw material prices.

The financial risk profile remained comfortable despite significant increase in debt availed for funding the capex undertaken by the group in fiscals 2020 and 2021. The financial risk profile is expected to remain stable over the medium term.

The Russia-Ukraine conflict is not expected to impact operations at the Uflex group's Russian subsidiary [Flex Films RUS LLC, Russia], as the entity contributes 3% to the consolidated revenue of the group, and all raw material purchases and sales are from and in Russia only. Hence, no impact is expected because of deprecation of the ruble over other currencies.

The ratings continue to reflect the company's established presence in the flexible packaging industry, diversified customer and product profiles and a comfortable financial risk profile.

These strengths are partially offset by large working capital requirement and susceptibility to cyclicality in the commoditised packaging films industry.

The Uflex Group offers end-to-end flexible packaging solutions, including films (BOPET, BOPP, CPP [cast polypropylene] and metallised), flexible laminates, holographic films, aseptic liquid packaging, packaging and printing machines and inks and adhesives, catering mainly to the FMCG industry. It has manufacturing facilities in India, Dubai, Mexico, Russia, Egypt, Poland, Hungary, Nigeria and the US.

The company's consolidated net profit rose 95.85% to Rs 313.21 crore on 63.46% rise in net sales to Rs 3387.76 crore in Q3 December 2021 over Q3 December 2020.