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CARE Ratings has downgraded Simplex Castings' long-term bank facilities of Rs 50 crore (reduced from Rs 59 crore) from CARE B/Stable to CARE C/Stable, while withdrawing its short-term facility ratings. The downgrade was triggered by a one-day delay in servicing a Rs 4.5 crore Loan Against Property EMI to Axis Finance (not rated by CARE), which the company says was due to a technical glitch during the transfer of credit limits from SBI Consortium to Kotak Bank. Short-term ratings were withdrawn because the company has no outstanding amounts per No Due Certificates from Bank of Baroda, Union Bank of India, and SBI. Despite the downgrade, Simplex Castings' financials have improved sharply: revenue grew 40% to Rs 172.63 crore in FY25, PAT jumped to Rs 15.13 crore from Rs 2.39 crore, PBILDT margin expanded to 18.44%, and overall gearing improved to 1.36x from 2.17x. The company continues to hold CRISIL BB/Stable (long-term) and CRISIL A4+ (short-term) ratings and has applied for withdrawal of CARE ratings.
This is a negative sentiment event as a rating downgrade signals credit risk, but the downgrade is linked to a single one-day technical delay rather than a structural credit issue. Shareholders may see short-term stock pressure, but the company's strong FY25 results, existing CRISIL rating, and self-initiated withdrawal from CARE limit the longer-term damage.