RATING RATIONALE
23 Jan 2023
Artha Infratech Pvt. Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.40.00 Crs. of Artha Infratech Pvt. Ltd.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating*@ |
|---|---|---|---|
| Fund Based | |||
|
Term Loan
Proposed
Over Draft Proposed |
20.00
20.00 |
Long Term | BWR BB + (Stable) |
| Sub Total | 40.00 | ||
| Grand Total | 40.00 | (Rupees Forty Crores Only) | |
**Details of Bank facilities are provided in Annexure-I
@This rating pertains to an existing assignment received prior to 6 October 2022 RATING ACTION / OUTLOOK : Stable
Note: The ratings pertains to an existing assignment received prior to 06 Oct 2022
BWR assigns the long term ratings of Artha Infratech Pvt. Ltd. to BWR BB+ with Stable outlook as their business risk profile will be maintained over the medium term. BWR has mainly relied on half yearly certified financials provided by the company ended 30th September 2022. The revenue from operations improved by 49.06% to Rs. 85.13 Crs. upto September 2022. The tangible net worth of the company increased to Rs. 68.88 Crs. with net profits of Rs. 20.16 in the half year financials. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. It continues to derive comfort from extensive experience from the management. However, these rating strengths remain constrained due to highly competitive industry and exposure to inherent risk. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.
KEY RATING DRIVERS
Credit Strengths:
- Locational Advantage :
The company/Firm is located in Delhi cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the company more efficient and cost effective.
- Experienced Management :
Mr. S.K Gupta, core promoter of the Artha Group is an engineer who has rich experience of finance, real estate and constructions. He has been a pillar of strength and has always provided a strong foundation to this enterprising group. The promoter's extensive experience in the construction and real estate sector has helped the company to establish its footprint in the market and maintain a strong relationship with its clients. The Management of the Company is comprised of the Board of Directors and a team of highly qualified, skilled, experienced and prominent executives and professionals handling various operations of the Group with accuracy, quality and excellence.
- Locational Advantage :
The company's site is located in Greater Noida cluster wherein the real estate market is growing owing to rapid economic growth, urbanization, and increasing job opportunities in this area. Thus has a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the company more efficient and cost effective.
- Adequate Financial Structure :
The tangible net worth of the company is Rs. 48.71 Crs with the gearing ratio of 0.08 times for FY 21-22. Debt Protection Matrix (i.e. DSCR & ISCR) stood at 3.46 & 14.90 times for FY 21-22.
Credit Risks:
- Competition in the Industry :
Entry barriers in the industry are low on account of limited capital and technology requirement and also low differentiation in the end product leading to intense competition and limiting the pricing power resulting in low profitability
- Declining Revenue from Operations & Profitability margins :
The revenue from operations of the company declined by 28.89%, thereby reducing the topline from Rs. 60.98 Crs. in FY21 to Rs. 43.36 Crs. in FY22. Crs. The net margin declined by 23.97% to 9.30% in FY 21-22. Although, the turnover have improved by 49.06% till September 2022 to Rs. 85.13 Cr with net margins of 23.68%. As the company has projects in hand, they will be able to achieve the turnover of Rs. 125 Crs. till March 2023.
- Exposure to inherent risk and cyclicality in the real estate sector :
The entity is exposed to the cyclicality inherent in an intensely competitive real estate sector, which can result in fluctuations in cash inflows because of volatility in scaleability. Further, the real estate industry as a whole is experiencing a short-term slow down with a decline in new launches and expected price rationalization on account of recent policy measures such as RERA and GST. However, the residential segment is already on the path to recovery from the Covid-induced troubles, backed by the pent-up demand and the need to invest in well-planned, spacious homes amidst extended work from home. Additionally, reduced housing loan interest rates, income tax benefits, and the government push for affordable housing are seen as positive factors for the sector.
For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).
PROFILEArtha Infratech Pvt. Ltd. is a private limited company incorporated in 2008 at New Delhi. The Entity is engaged in real estate development. Artha SEZ is developed by Wegmans Artha Group – 75 Years old Group operating in Real Estate, Financial Services, Hotels, Agriculture & Manufacturing - Wegmans Trustone’s proven track record of honoring 100% commitments for last many decades, High quality construction in all Delivered projects, Strong value system for its stakeholders & 100% Completion within committed timeline in all projects & No Litigations & Disputes Group with any stakeholder whatsoever.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 21-22 (Audited) |
FY 20-21 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 43.36 | 60.98 |
| EBITDA | Rs.Crs. | 6.00 | 22.05 |
| PAT | Rs.Crs. | 4.03 | 14.61 |
| Tangible Net Worth | Rs.Crs. | 48.71 | 44.84 |
| Total Debt/Tangible Net Worth | Times | 0.08 | 0.36 |
| Current Ratio | Times | 1.38 | 1.92 |
RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)
| S.No | Current Rating (2023) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2022 | 2021 | 2020 | ||||
| Fund Based | ||||||||||
| 1 | Term Loan - ProposedOver Draft - Proposed | Long Term | 20.0020.00 | BWR BB+(Stable) | NA | NA | NA | |||
| Total | 40.00 | (Rupees Forty 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 Criteria : For More Information Contact:| Analytical Contacts | |
|---|---|
|
Kartik Arora Lead Analyst kartik.a@brickworkratings.com |
Hari Kishan Yadav Associate Director - Ratings hari.ky@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 | HDFC Bank | Term LoanProposed | 20.00 | _ | 20.00 |
| 2 | HDFC Bank | Over DraftProposed | 20.00 | _ | 20.00 |
| Total | 40.00 | 0.00 | 40.00 | ||
| TOTAL (Rupees Forty Crores Only) | |||||
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate | Maturity Date | ISIN Particulars |
|---|---|---|---|---|---|
| NA | NA | NA | NA | NA | NA |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| NA | NA | NA | NA |
Ratings are not a recommendation or suggestion ,directly or indirectly, to you or any other person, to buy sell, make or hold on any investement,loan or security or to undertake any investement strategy with respect to any investment,loan or security or any issuer.
Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 12,000 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.
Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.
BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR"s best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).
BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.
The ratings assigned by BWR are only an expression of BWR"s opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.
BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user"s financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.
BWR"s ratings reflect BWR"s opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.
Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.
BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.
BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR"s public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR"s rating criteria are also generally made available without charge on BWR"s website.
This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.
BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.