| Torrent Investments Private Limited | ||||
| Rating Reaffirmed | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL A1+’ rating on the bank guarantee facility of Torrent Investments Pvt Ltd (TIPL).
The rating continues to reflect the strong financial flexibility enjoyed by the company from the high value of its liquid investments with majority stakes in the key operating companies of the Torrent group, Torrent Power Ltd (Torrent Power; 'CRISIL AA+/Stable/CRISIL A1+') and Torrent Pharmaceuticals Ltd (Torrent Pharma), against which TIPL has not availed any external debt. The rating is underpinned by the steady dividend inflow to TIPL from the listed entities of the Torrent group, which has diversified operations in the power and pharmaceutical industries. Furthermore, expected ramp up in the city gas distribution (CGD) business under Torrent Gas Ltd (TGPL, ‘CRISIL AA/Stable/CRISIL A1+’) over the medium term should result in lower dependence on TIPL.
These strengths are partially offset by exposure to market-related risks. Furthermore, the group is looking to expand into other businesse sand is evaluating options on the said front. Any material impact on the financial flexibility of TIPL owing to significant debt-funded acquisition or incremental investment or support from TIPL will be a key rating sensitivity factors. |
Analytical Approach CRISIL Ratings has followed the holding company approach as TIPL is the main holding company of the Torrent group, owning majority stake in the listed entities, Torrent Power and Torrent Pharma.
CRISIL Ratings notes that TIPL is likely to support the group’s CGD business (also referred to as the Torrent gas group [TGG]), as and when needed, over the medium term. Also, CRISIL Ratings has factored in the financial support available to the entities in the CGD business from TIPL.
Loans from the promoters to TIPL are interest-free and have been treated as neither debt nor equity. |
Key Rating Drivers & Detailed Description Strengths: Strong financial flexibility driven by investments in listed companies of the Torrent group and nil external debt on TIPL’s standalone balance sheet TIPL has strong financial flexibility aided by the market value of its investments in Torrent Pharma (71.25% shareholding as on date) and Torrent Power (53.56% shareholding as on date). The market value of TIPL’s shareholding in these companies was Rs 129,129 crore as on September 16, 2024, against which external debt was nil on a standalone basis as on March 31, 2024. While the financial dependence of the group’s CGD business on TIPL is reducing as the CGD business is growing, TIPL is still likely to extend need-based support to it over the medium term as the business is yet to become fully self-sustainable to meet its future growth as well as debt-servicing requirement. The high market value of investments by TIPL provides strong cushion against support available for the TGG and results in high value of debt cover (ratio of market value of listed investments and debt to be supported by TIPL) for TIPL.
Furthermore, TIPL may look to monetise the CGD business over the medium term as operations continue to grow with improvement in profitability over the medium term. While no dividend income is currently factored from the CGD business, this may aid the financial flexibility of TIPL, if it materialises.
Stable and diversified operations of key entities of the group, providing healthy dividend inflow TIPL benefits from the robust and diversified credit risk profiles of the operating listed entities of the group, in which the value of investment is substantial. This has enabled sizeable and steady revenue flow to TIPL in the form of dividend income. TIPL received dividend income of Rs 1,136 crore and Rs 1,181 crore in fiscals 2024 and 2023, respectively. Torrent Power and Torrent Pharma have well-defined dividend policy, and TIPL is expected to receive dividend inflow of Rs 1,100-1,200 crore per annum over the medium term. This will sufficiently cover any incremental capital requirements of the TGG or of any other existing business apart from power and pharma, while TIPL does not have any external debt obligation as on June 30, 2024.
Weaknesses: Exposure to market-related risks The financial flexibility available to TIPL will, to some extent, depend on the prevailing market sentiments and share prices. While the businesses of Torrent Power and Torrent Pharma are stable and have witnessed healthy growth in the past, increase in market-related risks, leading to a sharp fall in the market value of the investment in the operating companies, will be a key rating sensitivity factor.
Susceptibility to risks related to growth through acquisition The Torrent group is looking to expand into other businesses. CRISIL Ratings understands from the information available that TIPL (directly or indirectly) is one of the front runners for acquiring majority stake in CVC Capital Partners’ owned Gujarat Titan (IPL franchise). However, CRISIL Ratings understands that the deal is yet to be closed. Furthermore, TIPL was one of the bidders for Reliance Capital Ltd under the corporate insolvency resolution process (CIRP). The Supreme Court had allowed for the second round of bidding process as directed by the National Company Law Appellate Tribunal (NCLAT). CRISIL Ratings understands that the Hinduja group was the only bidder in the second round, while TIPL — the highest bidder in the first round — had withdrawn from the bidding process. However, as the matter is currently sub judice in the Supreme Court since last year, with limited developments on this front. Going forward, while strong existing financial flexibility of TIPL provides comfort, however, developments on the existing or future inorganic growth plans being evaluated by TIPL and evaluation of its implications on the financial flexibility of TIPL will be a key monitorable.
That said, while the track record of the group in ramping up businesses and potential monetisation activities support the credit risk profile, any material impact on the financial flexibility of TIPL owing to large, debt-funded acquisition or incremental investment or support from TIPL will be a key rating sensitivity factor. |
Liquidity: Strong Liquidity is supported by a debt-free standalone balance sheet. Cash and equivalent stood at Rs 874 crore as on March 31, 2024. Of its non-fund-based limit of Rs 500 crore, there is nil outstanding as on date. Financial flexibility will remain strong, supported by the high market value of its investment in listed entities of the group. Incremental capital requirement of the TGG should be met largely through the dividend payout from listed entities. |
Rating Sensitivity Factors Downward Factors
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About the Company Incorporated in 1985, TIPL is registered as a systematically important non-deposit-taking, non-banking financial company with the Reserve Bank of India. It functions as a core investment company and is the main holding company for the Ahmedabad-based Torrent group. The company owned 71.25% equity in Torrent Pharma and 53.56% equity in Torrent Power as on date. |
Key Financial Indicators– TIPL (Standalone; CRISIL Ratings-adjusted figures)
*The company does not have any interest-bearing debt #Promoter loans are treated as neither debt nor equity; there is no external debt |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||
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Criteria Details
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