Crisil gives poor rating to Kiri Dyes IPO

Credit Rating Agency Crisil has graded the initial public offering of Kiri Dyes and Chemicals Ltd with two points on a scale of five (2/5), indicating below-average fundamentals .

This is for the first IPO grading by the agency after the rules for mandatory grading were announced by the Securities and Exchange Board of India (Sebi) on April 30. The regulator had mandated grading of all issues, whose prospectus is filed after May 1 with the Sebi.

The company plans to come up with an IPO of five lakh shares at a price band of Rs 110-120 per share, aggregating to Rs 550-600 million.

However, the grading is constrained owing to limited upside in the profit potential of company's dyes business, which are moderately lower than returns from the planned deployment of IPO proceeds. A Crisil IPO Grade 5/5 indicates strong fundamentals and 1/5 indicates poor fundamentals.

The grading reflects its assessment of the company's equity fundamentals as distinct from an assessment of debt fundamentals.