...Weak Credit Profile: Fitch Ratings estimates that Ballarpur Industries Limited's (BILT) leverage will remain high over the next three years at above 6x, assuming a high-single-digit revenue growth rate and a slight improvement in EBITDA margin. Its fixed-charge coverage is also likely to remain weak, at below 2x. We expect FCF generation to be insufficient to service upcoming debt maturities. This exposes BILT to significant refinancing risk, unless the company is able to sell underperforming assets and use the proceeds to deleverage. Malaysian Asset Deal Terminated: BILT faces the twin challenges of high leverage and weak liquidity. We had earlier assumed that the company would be able to sell off its stake in Malaysia-based Sabah Forest Industries Bhd (SFI) by the end of financial year 2016 (FY16, ended-March 2016) and use the proceeds to deleverage. However, the proposed deal to dispose of the stake has been terminated. In addition, prices and demand for paper have remained weak over...
