Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs.65.46 Crs. of Rajshree Educational Trust
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||||
---|---|---|---|---|---|---|---|
Previous | Present | Previous(23 Apr 2020) | Present | ||||
Fund Based | |||||||
Term Loan Out-standing | 86.15 | 65.46 | Long Term | BWR BBB - /Stable Reaffirmation | BWR BBB /Stable Upgrade | ||
Over Draft Out-standing | 05.00 | 00.00 | |||||
Sub Total | 91.15 | 65.46 | |||||
Grand Total | 91.15 | 65.46 | (Rupees Sixty Five Crores and Forty Six lakhs Only) |
Upgrade in the ratings of bank loans availed by Rajshree Educational Trust (RET or the Trust) factors in growth in operating receipts and comfortable gearing besides debt coverage indicators. MCI approval for MBBS course for an elongated period of five years and sanction of 45 post graduate (PG) seats reduces business risks for the Trust, and supports the rating upgrade. The Trust proposes to enhance MBBS and PG intake by another 100 seats and 12 seats per year respectively, giving a good revenue visibility in the medium term.
BWR expects the Trust to improve its operating receipts and overall financial risk profile as indicated by interest coverage and financial leverage going forward. Liquidity in the Trust is expected to remain adequate during the medium term.
The rating is, however, constrained by decline in surplus margins during FY20, business concentration and regulatory risks.
Outlook: Stable
BWR believes that Rajshree Educational Trust.'s business risk profile will be maintained over the medium term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term.
KEY RATING DRIVERSCredit Strengths:
MCI has recognised the MBBS course for further five years, indicating that the Trust can add MBBS students every year as per sanctioned strength without warranting annual MCI inspections. Given that the residual period of term loans is upto five years, the Trust expects comfortable repayment of term loan obligations. MCI has also approved 12 out of 13 medical PG courses with total sanctioned intake of 45 students. These factors give comfortable revenue visibility for the Trust in the long term.
Gearing (Total Debt/TNW ratio) of the Trust has been comfortable at 0.76x (P.Y 0.82x), . Financial leverage (Total Debt/EBITDA ratio) is at 2x during FY20 against 2.24x during FY19 and the same is expected to improve to 1.52x in FY21 and 1.26x in FY22.
Debt coverage ratios of the trust have been comfortable at 1.78x (DSCR) and 4.13x (ISCR). Going forward, debt coverage ratios are expected to remain comfortable with expected improvements in interest coverage ratio to 5.29x in FY21 and 5.94x in FY22.
During FY20, operating revenues have grown by almost 11% to touch Rs.108.97 crs (P.Y Rs.98.35 crs). During the current year, against the projected revenues of Rs.126 crs, the Trust has already generated revenues of Rs.117.72 crs in 9MFY21 (provisional).
Credit Risks:
Business is concentrated in Bareilly, U.P, where the region is flooded with similar educational institutes. Also, any adverse decision by MCI or the UP govt. may jeopardise the operating revenues.
The Trust has limited powers in increasing the fees. Any statutory capping on tuition fees to be charged by the Trust may adversely affect the revenues.
Total revenues of the Trust have remained moderate at Rs.108.97 crs and Rs.98.35 crs in FY20 and FY19 respectively.
Operating surplus margins have declined marginally from 51.50% in FY19 to 44.71% in FY20 due to higher operating expenses such as staff salaries and discounts given to the students. Net surplus margin has suffered additionally due to higher depreciation expenses to slip to 15.25% during FY20 against 25.33% during FY19.
For arriving at its ratings, BWR has applied its rating methodology on a standalone basis as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Upward: Improvement in operating income, surplus margins and corpus fund would support upward rating action.
Downward: Any further withdrawal from corpus fund and deterioration in surplus margins and debt coverage indicators would attract adverse rating action.
COVID 19 impact: Due to inherent nature of the operations of the trust, business and revenue streams were particularly immune to COVID 19 impact. The Trust did not avail 6M moratorium on loans and also did not avail any emergency line of funding. No OTR (One Time Restructuring) in respect of bank loans facilities is proposed.
LIQUIDITY INDICATORS - Adequate
With cash accrual of Rs.38.44 crs during FY20, the Trust was comfortably placed in servicing TL repayment obligations of Rs.16.44 crs during FY20. During FY21 and FY22, cash accruals of Rs.40.74 crs and Rs.39.81 crs are expected against TL repayment obligations of Rs.19.51 crs and Rs.20.25 crs respectively.
ABOUT THE ENTITYRajshree Educational Trust was formed in 2008 and registered vide registration number 316 on 01st Sept. 2009 as a Public Charitable Trust. It has been running educational institutes in Bareilly since 2009. RET was founded by Smt. Krishna Kumari to promote education and research in the field of Engineering, Technology, Medicine, Management, Humanities and Sciences. Registered office of RET is at B-65, Ekta Nagar, Bareilly, UP. Rajendra Kumar Agarwal (President), Monika Agarwal (Vice-President) and Rakesh K Agarwal (Secretary) are the promoters of the society. Piyush Gupta (Treasurer), Rajesh Agarwal, Manu Agarwal and Ajay Agarwal are the other members of RET.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 108.97 | 98.35 |
EBITDA | Rs.Crs. | 48.72 | 50.65 |
PAT | Rs.Crs. | 16.62 | 24.91 |
Tangible Net Worth | Rs.Crs. | 129.09 | 138.35 |
Total Debt/Tangible Net Worth | Times | 0.76 | 0.82 |
Current Ratio | Times | 1.52 | 1.47 |
Key Parameters | Units |
|
|
---|---|---|---|
Operating Revenue | Rs.Crs. | Not Available | Not Available |
EBITDA | Rs.Crs. | Not Available | Not Available |
PAT | Rs.Crs. | Not Available | Not Available |
Tangible Net Worth | Rs.Crs. | Not Available | Not Available |
Total Debt/Tangible Net Worth | Times | Not Available | Not Available |
Current Ratio | Times | Not Available | Not Available |
NIL
NIL
ANY OTHER INFORMATIONNIL
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)Facilities | Current Rating (2021) | Rating History (2020) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount | Rating | 23Apr2020 | |||||||
Fund Based | |||||||||||
Term Loan - Out-standingOver Draft - Out-standing | Long Term | 65.4600.00 | BWR BBB/Stable | BWR BBB -/Stable | |||||||
Grand Total | 65.46 | (Rupees Sixty Five Crores and Forty Six lakhs Only) |
Facilities | Current Rating (2021) | Rating History (2019) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount | Rating | 30Mar2019 | 28Jan2019 | ||||||
Fund Based | |||||||||||
Term Loan - Out-standingOver Draft - Out-standing | Long Term | 65.4600.00 | BWR BBB/Stable | BWR BBB -/Stable | BWR B - (Stable) (Withdrawn) | ||||||
Grand Total | 65.46 | (Rupees Sixty Five Crores and Forty Six lakhs Only) |
Facilities | Current Rating (2021) | Rating History (2018) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount | Rating | NA | |||||||
Fund Based | |||||||||||
Term Loan - Out-standingOver Draft - Out-standing | Long Term | 65.4600.00 | BWR BBB/Stable | NA | |||||||
Grand Total | 65.46 | (Rupees Sixty Five Crores and Forty Six lakhs Only) |
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Analytical Contacts | |
---|---|
Saurabh Agarwal Assistant Manager - Ratings Board : +91 11 2341 2232 saurabh.a@brickworkratings.com |
Ashwini Mital Director - Ratings Board : +91 172 5032 295 / 6 ashwinimital@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | ||
---|---|---|---|---|---|---|
1 | Term LoanOut-standing | 65.46 | _ | 65.46 | ||
2 | Over DraftOut-standing | _ | _ | 0.00 | ||
Total | 65.46 | 0.00 | 65.46 | |||
TOTAL (Rupees Sixty Five Crores and Forty Six lakhs Only) |
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