CRISIL (Credit Rating Information Services of India Limited) has assigned a CRISIL IPO Grade “1/5” to the proposed initial public offering of Sejal Architectural Glass Ltd, indicating that the fundame…
CRISIL (Credit Rating Information Services of India Limited) has assigned a CRISIL IPO Grade “1/5” to the proposed initial public offering of Sejal Architectural Glass Ltd, indicating that the fundamentals of the issue are poor compared to other listed securities. However, the grade is not an opinion on whether the issue price is right in relation to the issue fundamentals. CRISIL“s grading reflects the challenges that Sejal Architectural is likely to face as a glass processor in setting up a largely debt-funded float glass project costing about INR 4.8 billion with debt funding of about INR 3.2 billion. The float glass industry, apart from being capital-intensive, is dominated by a few large global players and is characterised by profit cyclicality. Sejal Architectural is one of the five leading glass-processing companies in India but its ability to stabilise and operate a float glass plant, as well as sell about six times its current volume of glass, is unproven. The grading also reflects Sejal Architectural“s below-average corporate governance structure.