Rating agency CRISIL upgraded the auto major Mahindra & Mahindra's credit facilities with banks to stable, on account of improvement of the company's financial profile. CRISIL has upgraded its rating on long-term bank facilities of Mahindra & Mahindra Ltd to 'AA+/Stable' from 'AA/Positive'. The ratings were revised up despite expected debt burden on the company for acquiring controlling stake in South Korea's Ssangyong Motor. An 'AA' long-term rating symbolises instruments offering a high degree of safety with regard to timely payment of financial obligations. CRISIL also retained the rating on the short-term facilities and commercial paper programme of M&M at 'P1+' 'P1+' indicates that repayment of these borrowings is quite safe.
M&M has Rs 50 crore long-term working capital demand loans, besides a combined Rs 1,000 crore of short-term commercial paper programme, short-term loan and bank guarantee and letter of credit.
The upgrade has been driven by significant improvement in M&M's financial risk profile, particularly capital structure after conversion of its convertible bonds to equity shares in October 2010. M&M's financial risk profile will remain healthy over the medium term despite its debt- -funded investment plans, including acquisition of South Korea's Ssangyong Motor Company.
Furthermore, M&M's operating performance, which improved significantly in 2009-10, remained strong in the first half of 2010-11. CRISIL believes that M&M's cash accruals will remain robust over the medium term, despite some decline in operating margins because of increase in raw material prices.
MoneyWorks4Me method for rating and ranking mutual funds for SIP
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and
ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the
various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Performance Consistency: This is measure based on whether the fund has beaten the benchmark index consistently. For
this we compare the 3-year rolling returns of the fund with the benchmark for a minimum of 5 years and preferable 10
years. The period of rolling is one month and holding period is 3 years. Fund are color-coded Green on Performance when
the fund beats the benchmark more than 90% of the time. It is Orange if it beats 80% to 90% of the time and Red if less
than 80%. Funds with less than 5 year data are color-coded Grey.
Quality of Portfolio Holding: Moneyworks4Me has color-coded stocks as Green, Orange and Red based on whether the
company's performance has generated a ROCE above a threshold level (cost of capital) over 10 years (minimum 6 years) and
generated positive Free Cash Flow. For Banks it checks whether ROE is greater than 15% and sales has grown over previous
year. Stocks that perform consistently on these combined metrics are color-coded Green (min score 14 out of 20), Orange
(between 8 and 14) and Red (less than 8 out of 20).
Fund are color-coded Green provided the portfolio has 70% holding in Green stocks but not more than 20% in Red stocks.
Funds with more than 20% Red stocks in the portfolio are color-coded Red. The rest are Orange funds
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The
ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number
that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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