Odu’a Investment Company Limited (OICL), has received an Agusto & Co rating upgrade to A+ from A.
According to Agusto & Co, a Nigeria rating firm, the upgrade reflects the company’s good operating cash flow, bolstered by its diversified income streams and portfolio of subsidiaries and associates.
OICL is the non-operating holding company of Odua Group. OICL is owned and controlled by six states in Nigeria’s South-West region (Oyo, Ondo, Ogun, Osun, and Lagos).
“The rating is further strengthened by OICL’s adequate working capital supported by higher gains from investments, as well as the company’s low leverage profile due to its business model, which is centered on using internal funding sources and joint venture partnerships to finance growth initiatives,” the rating agency said.
In addition, the rating agency considered OICL’s long-standing operations across various sectors of the Nigerian economy and the potential increase in earnings from its ongoing portfolio rebalancing efforts.
However, it said that the rating is tempered by the company’s low profitability. mainly due to reduced dividend payouts from its associate company (Nigerite Limited), which committed funds towards expanding its production capacity.
“The rating is further moderated by the vulnerability of the future earnings of group entities to the rising cost pressures and weakening consumer discretionary spending, which could impact dividend payments to OICL,” Agusto & Co said.
The rating agency clarified that In assigning the rating, it assessed the financial condition of OICL as a standalone entity.
“Agusto & Co. did not appraise the performance of Odu’a Group, which comprises of Odu’a Investment and its ten subsidiaries and associates,” it said.
In the financial year ended December 31, 2023, OICL’s total operating income rose by seven percent to N3.9 billion, driven by gains in its investment securities and increased rental and interest income.
However, this growth was moderated by a decline in dividend receipts from group entities, particularly Nigerite Limited, due to the installation of a new production line. In FYE 2023, Odu’a Investment’s operating expense.
