Brickwork Ratings revises/reaffirms the ratings for the Bank Loan Facilities of Rs. 19.00 Crs. of PVR Projects
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (17 Feb 2021) |
Present | ||
Fund Based | 3.00 | 9.00 | Long Term |
BWR B+ /Stable
Reaffirmation |
BWR BB -
/Stable Upgrade |
Non Fund Based | 3.00 | 10.00 | Short Term |
BWR A4
Reaffirmation |
BWR A4
Reaffirmation |
Grand Total | 6.00 | 19.00 | (Rupees Nineteen Crores Only) |
BWR has essentially relied upon the audited financials up to FY21, provisional financials of FY22, projected financials up to FY25, publicly available information, and information/clarifications provided by the firm's management.
The rating upgrades/reaffirms factors of experienced partners, debt service coverage metrics, order book position, and adequate liquidity position. However, the ratings are constrained by improved revenue, remains a small scale of operations, and moderate profitability margins, below-average capital structure, presence in a highly competitive industry and sub-contract nature of business, the constitution of the entity, and working capital intensive nature of operations.
The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR expects that PVR Projects business risk profile will be maintained over the medium term. The outlook may be revised to Positive in case of better than expected operating income and improvement in financial risk profile debt-protection indicators. The outlook may be revised to Negative if the operating metrics weaken or if larger than anticipated capex leads to deterioration in credit metrics and liquidity
Credit Strengths:
The partners are well experienced in the line of activity, which has enabled the firm to build healthy relationships with customers and suppliers
Improved debt service coverage metrics and has adequate marked by interest service coverage ratio (ISCR) and debt service coverage ratio (DSCR) were around Rs.6.19 times and 5.53 times respectively, as on 31 March 2021 against 3.20 times and 1.76 times, respectively, as on 31 Mar 2020.
Presently, the firm has an order book position of around Rs.126 Crs as of April ended 2022 and is expected to be completed in the next 12-24 months.
The firm revenue has improved to Rs.23.60 Crs in FY21 and Rs.19.39 Crs in FY20. On a provisional basis, the firm has reported a revenue of around Rs.71.30 Crs for FY22. Improved revenue an account of initiated new sub-contracts during the period. The profitability margins were moderately marked by the net profit and the operating margin was 5.00% and 12.41% in FY21 against 2.74% and 7.13%, respectively in FY20.
The firm has a below-average capital structure marked by the low partners capital and moderate gearing ratio were around Rs.3.39 Crs and 1.98 times, respectively, as on 31st March 2021 against the Rs.2.38 Crs and 1.37 times, respectively, as on 31st March 2020.
The construction industry is highly fragmented with the presence of many organized and unorganized players. Further, the sub-contract nature of the business places pressures on the profitability of the firm.
Constitution as a partnership firm has the inherent risk of a possible withdrawal of the capital by partners, which can adversely affect its capital structure.
BWR has applied its rating methodology as detailed at the end of the document. BWR has adopted a standalone approach for arriving at its ratings.
RATING SENSITIVITIES
Upward - Sustained improvement in scale of operations with improved profitability margins and capital structure. Specific credit metrics that could lead to an upgrade of the firm's rating include (1) Total Debt/Partners capital below 1.00 times on a continuous basis, (2) DSCR and ISCR greater than 3.0 times on a continuous basis. Execute order book position timely.
Downward - Specific credit metrics that could lead to a downgrade if there is any decline in revenue, debt service coverage metrics and further there is a significant deterioration in the credit profile of the firm.
The liquidity position of the Firm is adequate as its current ratio as on March 31, 2021 is moderate at 2.01 times. The average working capital utilization for the last 12 months is 52% and the adequate net cash accruals of Rs.4.08 Crs, Rs.4.51 Crs and 4.95 as against the CPLTD of Rs.1.11 Crs in FY23, FY24 and FY25 projections respectively.
PVR projects was registered in 2016 at Vijayawada, Krishna district, Andhra Pradesh. PVR Projects is engaged in civil contract works on a sub-contract basis and crushed aggregate manufacturing. The manufacturing plant is located in Vijayawada, Krishna district, Andhra Pradesh.
Mr. Pasangula Adinarayana, the Managing Partner, has well experienced in the line of activity.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 23.60 | 19.39 |
EBITDA | Rs.Crs. | 2.93 | 1.38 |
PAT | Rs.Crs. | 1.18 | 0.53 |
Tangible Net Worth | Rs.Crs. | 3.39 | 2.38 |
Total Debt/Tangible Net Worth | Times | 1.98 | 1.37 |
Current Ratio | Times | 2.01 | 1.10 |
Facilities | Current Rating (2022) | 2021 | 2020 | 2019 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 9.00 |
BWR BB-/Stable
(Upgrade) |
17Feb2021 |
BWR B+ Stable
(Reaffirmation) |
NA |
NA
|
22Nov2019 |
BWR B+ Stable
(Assignment) |
Non Fund Based | ST | 10.00 |
BWR A4
(Reaffirmation) |
17Feb2021 |
BWR A4
(Reaffirmation) |
NA |
NA
|
22Nov2019 |
BWR A4
(Assignment) |
Grand Total | 19.00 | (Rupees Nineteen Crores Only) |
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 CriteriaAnalytical Contacts | |
---|---|
Prashanth Boorala Ratings Analyst Board : +91 40 2331 0161 / 2331 0071 prashanth.b@brickworkratings.com |
Nagaraj K Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
---|---|---|---|---|---|---|
1 | Union Bank of India | Cash CreditSanctioned | 9.00 | _ | 9.00 | |
2 | Union Bank of India | Bank GuaranteeSanctioned | _ | 10.00 | 10.00 | |
Total | 9.00 | 10.00 | 19.00 | |||
TOTAL (Rupees Nineteen Crores Only) |
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