RATING RATIONALE

08Feb2022

AGI Infra Ltd.

Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Rs. 113.00 Crs. of AGI Infra Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (19 Jan 2021)	Present
Fund Based	94.75	105.00	Long Term	BWR BBB /Stable Reaffirmation	BWR BBB + /Stable Upgrade
Non Fund Based	6.00	8.00	Long Term	BWR BBB /Stable Reaffirmation	BWR BBB + /Stable Upgrade
Grand Total	100.75	113.00	(Rupees One Hundred Thirteen Crores Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

Upgrade in the ratings of bank loan facilities of AGI Infra Ltd (AIL or the company) factors in growth in revenues along projected lines and improvement in the overall financial risk profile, as indicated by improvement in net worth position and gearing ratios. Despite challenging economic circumstances, the company has been successfully generating sales velocity of Rs.16 crs approx. per month during April 2021 to September2021 and the number of unsold units gives good revenue visibility for the next 12 months. The company proposes to launch a few more residential projects in FY23 that would strengthen the project book and revenue visibility for the company.

Going forward, owing to healthy bookings, customer advances and reduction in long term borrowings, BWR expects the company to improve upon its revenues, net worth, gearing and overall financial risk profile along the projected lines. Further, an unsold inventory of approx. 660 units under various stages of construction and proposed launch of new housing projects provides a good medium term revenue visibility for the company.

Outlook: Stable

BWR believes the AGI Infra Ltd.’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 DRIVERS

Credit Strengths:

Growth in Revenues :
Operating revenues of the company have improved from Rs.80.62 crs in FY19 to Rs.91 crs in FY20 and further to Rs.110 crs in FY21 on the strength of healthy bookings and timely handover of the units to clients. During current 6MFY21 (unaudited results), the company has generated revenues of Rs.95.53 crs against full year projections of Rs.180 crs.
Improvement in Net worth position and Gearing ratios: :
Net worth position has improved from Rs.55.54 crs in FY19 to Rs.68.26 crs in FY20 and further to Rs.90.75 crs in FY21 due to increase in share capital and retention of profits in the business (net of dividends paid during the year). During FY21, the company has increased its authorized share capital and paid up share capital to Rs.15 crs (earlier Rs.12 crs) and Rs.12.22 crs (earlier Rs.10.22 crs) respectively after issuance of additional 20L shares at price of Rs.53 per share with a premium of Rs.43 per share. Due to repayment of term debt of past projects and increase in share capital of the company, gearing ratio (Total Debt/TNW) has improved from 1.54x during FY20 to 0.57x during FY21.
Sales Velocity: :
During 6MFY22 (i.e during April 2021 to Sept 2021), the company has generated total sales of Rs.96 crs against sale of 4.49 L sq. ft. super area. The sales velocity turns out to be Rs.16 crs per month against 0.75 L sq. ft per month. At present, the company has unsold 660 units in various projects with approx. unsold area of 10.14 L sq. ft and gives a good revenue visibility for next 12 months. Further, the company proposes to launch a few more residential projects in FY23 that would strengthen the project book and revenue visibility for the company.
Project Completions and new project launches: :
During the past 12 months, the company has completed and delivered its two residential projects namely AGI Palace and AGI Sky Garden and has launched/launching new projects namely AGI Maxima and Jalandhar Heights III. The company also propose to launch new residential projects in the next few months.

Credit Risks:

Inherent risks associated with Real Estate projects :

Real Estate is highly regulated and completion of the project depends upon a number of internal and external factors amongst which the most common are cost and time overruns and customer defaults, as the project is highly dependent on customer advances for its project funding.
Business Concentration Risks: :

The developer’s business is concentrated in the Jalandhar city of Punjab with almost all the existing projects being developed by the company located in single city. With no major industrial and commercial hubs present in and around the city, the company may face difficulty in growing its business in the city until and unless the company diversifies its business to other nearby major cities.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology on a standalone basis as detailed in the Rating Criteria detailed below

RATING SENSITIVITIES

Upward: Timely completion of undertaken projects, improvement in booking position and sale realizations, growth in revenues and cash flows.

Downward: Stagnation of sale position, delays in construction of the projects, decline in revenues and stretched cash flows.

LIQUIDITY INDICATORS - Adequate

During Q4FY22, the company expects to generate cash inflows of Rs.35 crs through sales realizations and customer advances to support loan repayments of Rs.13 crs during the quarter. Projects related expenses of Rs.45 crs are proposed to be met through remaining surplus of Rs.22 crs, besides undisbursed working capital loans of Rs.36 crs.

During FY23, the company expects to generate net sale realization of Rs.225 crs against loan repayments of Rs.10 crs. Project related and other expenses of Rs.216 crs are proposed to be met through remaining surplus of Rs.215 crs and undisbursed project loans of Rs.20 crs.

ABOUT THE ENTITY

AGI Infra Ltd., established on 27th May 2005 with its current registered office at SCO 1-5, Urbana, Jalandhar Heights II, Jalandhar, is engaged in the development of residential and commercial real estate projects in Jalandhar, Punjab. Sukhdev Singh, Salwinderjit Kaur, Balwinder Singh, Atul Mehta, Pramod Kumar Sharma and Anuj Rai Bansal are the directors in the company. Currently, AGI Infra Ltd is handling total 7 different residential projects namely Jalandhar Heights - 2 (Ph-II and Ph-III), AGI Smart Home, AGI Palace, AGI Sky Garden, AGI Maxima and Urbana by AGI and is in the process of launching another project Jalandhar Heights - 3 in Jalandhar All the existing projects are registered under RERA.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	110.24	91.02
EBITDA	Rs.Crs.	32.71	33.04
PAT	Rs.Crs.	16.92	15.05
Tangible Net Worth	Rs.Crs.	90.75	68.26
Total Debt/Tangible Net Worth	Times	0.57	1.54
Current Ratio	Times	1.14	1.31

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

NIL

ANY OTHER INFORMATION

NIL

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	105.00	BWR BBB+/Stable (Upgrade)	19Jan2021	BWR BBB Stable (Reaffirmation)	16Jan2020	BWR BBB Stable (Reaffirmation)	NA	NA
Non Fund Based	LT	8.00	BWR BBB+/Stable (Upgrade)	19Jan2021	BWR BBB Stable (Reaffirmation)	16Jan2020	BWR BBB Stable (Reaffirmation)	NA	NA
Grand Total		113.00	(Rupees One Hundred Thirteen Crores Only)

Rating Advisory, as on 21Jan2022
Press Release, as on 21Jan2022
Advisory issued for delay in Rating Review.

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria

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

AGI Infra Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Capital Small Finance Bank	Term Loan - Sanctioned	_	_	0.00
2	Capital Small Finance Bank	Over Draft - Sanctioned	8.00	_	8.00
3	Central Bank of India	Bank Guarantee - Sanctioned	2.00	_	2.00
4	Central Bank of India	Term Loan - Sanctioned	20.00	_	20.00
5	Others	Term Loan - Proposed	_	_	0.00
6	Punjab National Bank	Term Loan - Sanctioned	21.00	_	21.00
7	Punjab National Bank	Term Loan - Sanctioned	_	_	0.00
8	Punjab National Bank	Term Loan - Sanctioned	_	_	0.00
9	Punjab National Bank	Bank Guarantee - Sanctioned	6.00	_	6.00
10	State Bank Of India (SBI)	Term Loan - Sanctioned	_	_	0.00
11	State Bank Of India (SBI)	Term Loan - Sanctioned	26.00	_	26.00
12	State Bank Of India (SBI)	Over Draft - Sanctioned	30.00	_	30.00
Total			113.00	0.00	113.00
TOTAL (Rupees One Hundred Thirteen Crores Only)

ANNEXURE-II

INSTRUMENT DETAILS

Instrument	Issue Date	Amount (Rs.Crs)	Coupon Rate (%)	Maturity Date	ISIN Particulars
N.A		0

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
NIL

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