Vishnu Prakash R Punglia shares in focus after CARE downgrades ratings on loans worth ₹960 crore

Shares of Mumbai-based infrastructure developer Vishnu Prakash R Punglia Ltd. (VPRPL) will be in focus on Tuesday, June 10, after ratings agency CARE Ratings downgraded its rating and outlook on the company's short and long-term bank facilities.

In its note, CARE has downgraded VPRPL's long-term bank facilities worth ₹200 crore to CARE BBB with a negative outlook from its earlier rating of CARE BBB+ with a stable outlook.

Additionally, VPRPL's long-term and short-term bank facilities worth ₹760 crore have also been downgraded to CARE BBB and CARE A3 respectively with a negative outlook from CARE BBB+ and CARE A3+ respectively, with a stable outlook.

CARE wrote in its note that the outlook revision from stable to negative is driven primarily by a continued increase in VPRPL's working capital intensity in financial year 2025, leading to a greater dependence on working capital borrowings and adversely impacting the company's liquidity profile. The revision also factors in a lower-than-expected scale of operations in the previous financial year, according to CARE.

The ratings agency cited a continued high working capital intensity for VPRPL's operations over the last two years, due to an elongation of collection period and inventory holdings, along with a significant exposure to water supply projects, resulting in delays in work certification and payment releases, impacting the operating performance last year.

VPRPL had an outstanding order book worth ₹5,363 crore at the end of the last financial year, with orders spread across 11 states, majorly from Rajasthan, Uttarakhand, Uttar Pradesh and Madhya Pradesh. However, CARE noted that nearly 34% of its order book pertains to projects recently awarded and are at a nascent stage of execution, while nearly half of the order book is slow moving due to factors including land unavailability, delay in finalisation of designs and slow payment releases from the principal.

"Timely execution of the order book including nascent stage projects and slow-moving projects within envisaged timelines shall remain crucial from a credit perspective," CARE's note said.

CARE has suggested that its outlook on VPRPL could be revised back to stable as working capital intensity improves, along with the company's liquidity position, thereby streamlining operations.

Shares of Vishnu Prakash R Punglia ended 1.3% higher on Monday at ₹171.65. The stock is up 70% from its IPO price of ₹99, having made its stock market debut back in September 2023. However, the stock has halved from its recent 52-week high of ₹345.75.