CARE retained its rating on company's long term bank facilities of Rs 173 crore at BBB, but revised outlook from stable to negative.
Shares of Gati fell 2.8 percent intraday on August 21 after rating agency CARE revised its outlook on the company's long term loans to negative from stable.
The stock wiped off more than 60 percent of its value in the last one year. It was quoting at Rs 40.45, down Rs 0.85, or 2.06 percent on the BSE at 1126 hours.
CARE retained its rating on the company's long term bank facilities of Rs 173 crore at BBB, but revised outlook from stable to negative.
The agency also downgraded the rating on short term bank facilities (Rs 5 crore) to A3 from A3+ earlier.
In case of company's medium-term fixed deposits (Rs 50 crore), CARE revised the outlook to negative from stable, but retained rating at BBB.
"The revision in ratings assigned to the bank facilities of Gati Limited (Gati) takes into account marginal decline in revenue from operations along with deterioration in profitability margin, resultant reduction in gross cash accruals during Q1FY20 and significant dilution in promoter’s shareholding," CARE reasoned.
It said the ratings, however, derive strength from its experienced management, extensive support from its subsidiary companies for augmenting e-commerce division and favourable industry prospects.
The ratings continued to remain tempered by customer concentration risk in e-commerce segment and presence of stiff competition from many unorganized players in the industry, it added.The ability of the company to improve its operational efficiency thereby garnering better profit margins and increase the scale of operations are the key rating sensitivities, it feels.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.