Rating Rationale

Brickwork Ratings has assigned a long-term rating of BWR BBB-/Stable and a short-term rating of BWR A3 to the bank loan facilities of Admire Wheels Private Limited (AWPL).

The ratings reflect AWPL’s established business position as an authorized dealer for Kia India Pvt Ltd in Dehradun and surrounding regions, supported by over two decades of promoter experience in automotive retail. The company benefits from its association with a well-established automotive group, alongside strong financial flexibility derived from the substantial personal net worth base of its promoter-directors. The ratings also factor in AWPL's comfortable debt coverage metrics, moderate working capital limit utilization, and the strategic market presence of the Kia brand in the mid-size SUV and crossover passenger vehicle segments.

However, the ratings are constrained by the company’s thin operating profitability, which is inherent to the auto dealership business, and intense competition from other OEM dealerships in the region. The company's growth prospects remain vulnerable to cyclicality in the automotive sector and OEM-driven volume allocations. Additionally, the business remains working capital intensive, supported by short-term bank limits and channel financing.

The Stable outlook reflects expectations that AWPL will maintain a steady business and financial risk profile over the medium term, supported by sustained demand for Kia vehicles and continued support from its experienced promoters.

The rating is based on audited financials for FY24 and FY25, provisional financials for FY26, projected financials for FY27 and FY28, along with publicly available information and management clarifications.

• The sanction terms include standard covenants generally stipulated for such facilities.
• Unsecured loans from promoters/directors considered towards ATNW shall remain subordinated and shall not be withdrawn until the tenure of the bank facilities.

• Experienced Management and Track Record: :

  The company is led by experienced promoter-directors, Mr. Vivek Veerbhan (54) and Mr. Pankaj Veerbhan (47). Both hold MBA degrees and bring 24 and 20 years of industry experience, respectively. Their extensive domain knowledge and long-standing involvement in the automotive retail sector provide a foundation of strong operational leadership and strategic execution across Uttarakhand. Furthermore, the directors' seasoned expertise ensures smooth outlet operations and empowers the company to navigate competitive automobile market dynamics with confidence.

• Moderate Financial Risk Profile: :

  The company reported Rs. 273.06 Cr of Total Operating Income and Rs. 1.88 Cr of Net Profit in provisional FY2026 (FY25: Rs. 262.72 Cr TOI and Rs. 1.56 Cr PAT), reflecting steady growth in top-line operations and stable profitability. The company generated gross cash accruals of Rs. 2.56 Cr in provisional FY2026, indicating sufficient liquidity to support ongoing operational commitments. The company's Tangible Net Worth expanded to Rs. 10.10 Cr in FY26 due to continuous profit retention. The Interest Service Coverage Ratio (ISCR) stood comfortable at 1.85 times in provisional FY2026, highlighting the company's adequate debt servicing capability.

• Established Dealership Tie-up: :

  As an authorized dealer in Uttarakhand, the company leverages its established business tie-up with Kia India to capture consistent sales volumes, benefit from popular model launches, and maintain a strong competitive market position.

• Strong Group Support & Operational Synergies: :

  The rating factors in the operational, financial, and managerial support from the established automobile dealership group. The company derives significant strength from shared group infrastructure, joint procurement efficiencies, and substantial group capital backing, with a combined group turnover of Rs. 603.29 Cr and a combined group net worth of Rs. 31.30 Cr in FY25. Credit strength is further enhanced by unconditional personal guarantees from both promoter-directors covering the entire sanctioned bank limits.

• Thin Profitability Margins and High Dependence on a Single Principal: :

  The auto dealership business inherently operates on thin profit margins due to the high cost of vehicle procurement (95% COGS), which limits internal cash accruals and financial flexibility. Furthermore, revenue is largely dependent on a single OEM (Kia India), exposing the company to significant single-principal concentration risk.

• Intense Competition, Regional Concentration, and Cyclical Industry Exposure: :

  The company operates in a highly fragmented automobile dealership sector, characterized by the presence of competing OEM brand outlets within the region. Such regional concentration, combined with intense market competition, may constrain pricing power and exert pressure on profit margins. To defend sales volumes, the company may be required to offer promotional schemes and discounts, which could impact overall profitability. Additionally, performance remains susceptible to broader economic cycles and interest rate fluctuations affecting consumer vehicle purchases.

Going forward, the company’s ability to improve its revenue profile and strengthen its financial risk profile will remain the key rating sensitivities.

Positive:

• Growth in operating income by around 10% and expansion of PAT margin to 1% and above, along with enhanced cash accruals and a stronger cash position.
• Sustenance of healthy financial risk profile.

Negative:

• Decline in operating income below 20%, leading to a deterioration in profitability and financial risk profile.
• Material weakening in the company's liquidity position.

Admire Wheels Pvt. Ltd. maintains an adequate liquidity position, supported by healthy cash accruals and comfortable working capital utilisation. The company reported cash and bank balances of Rs. 1.12 crore as on 31 March 2025, which stood at Rs. 0.92 crore as per the unaudited FY26 financials. The current ratio remained above unity for FY 26, with an expected improvement over the near term supported by steady cash generation. The company generated gross cash accruals of Rs. 2.24 crore in FY25 and Rs. 2.56 crore in FY26 (UA) against nil CPLTD obligations in FY26. The Interest Service Coverage Ratio (ISCR) remained healthy at 1.82 times in FY25 and 1.85 times in FY26 (UA). Further, the company's working capital limits remained moderately utilised, with an average utilisation of around 60% (around 70% with IndusInd Bank and 50% with HDFC Bank). Liquidity is further supported by the overall financial flexibility derived from the substantial combined group net worth base and the strong personal net worth backing of the promoter-directors. 

Admire Wheels Private Limited maintains an adequate Environmental, Social, and Governance (ESG) profile, broadly aligned with the operational characteristics of the auto retail sector.

Environmental (E): As an auto dealership, the company’s direct environmental impact is limited compared to manufacturing entities. Environmental exposure is primarily linked to showroom power consumption and routine vehicle servicing operations (handling of discarded engine oils, spare parts, and batteries). The company's alignment with Kia India's growing hybrid and electric vehicle (EV) product line supports regional transition toward lower-emission mobility.

Social (S): Social factors relate to manpower management, customer service compliance, and workplace safety across its retail outlets and workshops. The company employs sales, administrative, and technical workshop personnel across Dehradun, Saharanpur, and Srinagar, adhering to basic automotive service standards and OEM operational guidelines provided by Kia India.

Governance (G): The company is directed by promoter-directors Mr. Vivek Kumar Veerbhan and Mr. Pankaj Veerbhan. Operational management is structured across sales, workshop, and administrative functions. Financial tracking and compliance are supported by standard internal accounting practices, periodic external audits, and digital dealership management platforms integrated with the OEM.

M/s Admire Wheels Private Limited was incorporated on March 1, 2019, with its registered office in Muzaffarnagar, Uttar Pradesh, and corporate operational network centered in Dehradun, Uttarakhand. The company is an authorized 3S (Sales, Service, and Spares) dealer for Kia India, operating multiple showroom outlets and workshops across Dehradun, Saharanpur, and Srinagar (Garhwal). The company is promoted by two key promoter-directors, Mr. Vivek Kumar Veerbhan and Mr. Pankaj Veerbhan, who hold extensive industry experience in automotive retail.

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or complexity related to the structural,transactional or legal aspects. Details on the complexity levels of the instruments are available on BWR's website Complexity Levels.

Not Applicable

BWR Board of Directors have no influence over rating decisions, nor do they sit on the rating committee or review, discuss or evaluate any credit rating during the Board meetings.

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI]. BWR is the 5th agency to get a credit rating registration in India in 2009 and its corporate office in Bengaluru. It has a country-wide presence with representatives in 150+ locations. Canara Bank is our institutional investor.

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