CRISIL gives 3/5 to rating to Sangam

CRISIL Research has come out with its report on Sangam (India)

and it has maintained the fundamental grade of 3/5 to the company in its latest report. Sangam India’s Q2-FY12 revenues were in line but profitability was lower than CRISIL’s expectations. Sangam reported revenues of Rs 3,756 million, up by 39.4 per cent year-on-year basis backed by healthy demand growth in the poly-viscose (PV) yarn segment and incremental revenues from the toll division (which commenced operations in Q3-FY11).

However, lower EBITDA margin in the textile segment due to high raw material costs moderated the overall operating profitability in Q2-FY12. The company is in the process of completing the on-going capacity expansion worth Rs 1,800 million that includes doubling of denim fabric capacity to 32 million meters by end of Q3-FY12.

Sangam’s Q2-FY12 revenues grew by 39.4 per cent year-on-year to Rs 3,756 million. Q2 revenues include collections of Rs 466 million by the toll division, which commenced operations only in Q3-FY11. Revenues from the textile business grew at a CAGR of 22 per cent year-on-year. Sangam reported an EBITDA margin of 10.4 per cent in the textile segment and a consolidated EBITDA margin of 10.5 per cent in Q2-FY12.