India Ratings said that it continues to take a consolidated view of WCPM and its subsidiaries, Andhra Paper (APL) and West Coast Opticable (WCPM).
Both WCPM and APL are in the same business of manufacturing paper, with APL accounting for around 45% of the combined capacity.
WCOL has moderate linkages with its parent, WCPM. Therefore, India Ratings has referred to the consolidated credit profile of WCPM throughout the rationale.
The 'positive' outlook reflects India Ratings' expectation of a sustained growth in the consolidated revenue and the maintaining of strong profitability and credit metrics, as the benefits of the improvement in business profile post the acquisition of APL have kicked in with the recovery in demand.
India Ratings further stated that a sustained strong profitability and growth in revenue along with maintaining of credit metrics could lead to an upgrade of the ratings. However, a sharp deterioration in profitability and/or increase in debt, leading to the net adjusted leverage exceeding 1x, on a sustained basis, could lead to the outlook being revised back to 'stable'.
West Coast Paper Mills is the flagship company of Kolkata based– SK Bangur Group. The company operates in two segments- paper and optic fibre cable. The paper division accounts for around 95% of the total revenue.
The company reported 66.24% rise in consolidated net profit to Rs 124.55 crore on a 13.91% increase in sales to Rs 1067.37 crore in Q4 FY22 over Q4 FY21.
The scrip slipped 1.22% to currently trade at Rs 337.20 on the BSE.
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