CRISIL has assigned a CRISIL IPO Grade “4/5″ (pronounced ‘four on five’) to the proposed initial public offer of Precision Pipes and Profiles Company Ltd (PPAP). This grade indicates that the fundamentals of the issue are above average, relative to other listed equity securities in India.

The grading reflects the company management’s success in transforming a small plastic processing business into a Tier-I supplier of PVC profiles to leading passenger car OEMs. It takes into account the company’s track record of strong client and collaborator relationships over an extended period, healthy revenue growth potential, strong product and tool development capabilities, the expected enhancement in management’s corporate governance performance with the appointment of high profile independent directors on the board, and the possibility of revenue and profit upside from the proposed export project.

The grading also takes into account the fact that future margins are likely to be lower than in the past, and the uncertainties arising out of the absence of a succession plan in the group’s finance function and the impact of any future separation of promoters on the company.