Rating Rationale

Brickwork Ratings (BWR) has assigned a long-term rating of BWR BBB- with a Stable outlook to the Rs. 116.74 Crore bank loan facilities of Deepak Infra and Homes Private Limited (DIHPL).

The rating is strengthened by the promoter group’s established track record and brand equity in the regional real estate market, early execution progress marked by obtaining the Occupancy Certificate (OC) for flagship commercial developments significantly ahead of RERA deadlines, strong cash flow visibility backed by substantial contracted sold receivables, a robust project lifecycle Debt Service Coverage Ratio (DSCR), a clean debt servicing history, and an irrevocable net surplus cash flow backstop from the group entity. However, the rating is offset by elevated capital structure leverage on both reported and adjusted bases, inherent execution and sales absorption risks across ongoing developments, and complete geographical concentration risk within a single regional micro-market.

The Stable outlook reflects BWR’s expectation that DIHPL will maintain its de-risked business profile by sustaining project execution momentum and steady customer collections from its sold inventory. The outlook is supported by the availability of substantial undrawn term loan facilities (~50% committed headroom), long-term principal moratoriums across major construction loans (extending up to February 2029), and liquidity backstops from promoter quasi-equity and group cash surpluses, which collectively provide a strong cushion against short-term market fluctuations and ensure smooth debt servicing over the medium term.

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

• Experienced Promoters and Established Group Track Record :

  Deepak Infra and Homes Private Limited (DIHPL) benefits from the 35+ years of real estate domain experience of its promoter, Mr. Deepak Kalyanji Chande (supported on the board by Mr. Shubh Deepak Chande), alongside the 37-year track record of the group flagship, Deepak Builders and Developers (DBD; completed 32 projects encompassing ~22.09 lakh sq. ft.). Under a strategic corporate realignment, DBD will not undertake fresh developments, transferring all prospective residential and commercial projects to DIHPL to fully leverage the group's established brand equity, contractor networks, and market standing.

• Demonstrated Execution Capabilities and Timely Project Delivery :

  The group maintains a consistent track record of delivering developments well ahead of stipulated RERA completion timelines. Under DIHPL, the flagship commercial development, Nathseeta Yeolekar Commercial Tower, achieved 99.1% construction completion and received its Occupancy Certificate (OC) in June 2026—2.5 years ahead of its RERA deadline of December 31, 2028. Across DIHPL’s active portfolio of 5 projects (6.69 lakh sq. ft. developer share), cumulative construction completion stands at 44.6% (Rs. 216.4 Crore incurred out of Rs. 485.2 Crore budgeted cost), demonstrating steady physical execution across all sites.

• Healthy Sales Absorption and Strong Cash Flow Surplus Cushion :

  The ongoing portfolio has achieved a consolidated sales velocity of 52.3% (3,50,279 sq. ft. sold across commercial and residential developments), generating Rs. 125.0 Crore in realized customer collections. Full project execution and debt payoff are projected to yield a net cash surplus of Rs. 289.1 Crore. Under a stress-tested scenario assuming zero future sales, committed receivables (Rs. 166.1 Crore), cash reserves (Rs. 12.7 Crore), and undrawn term loans (Rs. 71.3 Crore) cover 60% of all mandatory future outlays (Rs. 415.4 Crore total), while operational cash flows support an average lifecycle Cash Flow DSCR of 5.0x, providing substantial debt servicing headroom.

• Significant Operational Scale Expansion and Earnings Acceleration :

  In FY2026 (provisional), DIHPL's revenue from operations surged to Rs. 127.32 Crore (vs. Rs. 13.65 Crore in FY2025 and Rs. 10.96 Crore in FY2024], driven by Percentage of Completion Method (POCM) revenue recognition as construction milestones matured. Absolute operating EBITDA expanded significantly to Rs. 11.55 Crore [vs. Rs. 1.17 Crore in FY2025 and Rs. 2.79 Crore in FY2024] with margins stabilizing at 9.07%. Profit After Tax (PAT) expanded to Rs. 4.82 Crore [vs. Rs. 0.78 Crore in FY2025 and Rs. 1.97 Crore in FY2024], driving Return on Capital Employed (ROCE) to 10.95% [vs. 1.34% in FY2025] and expanding Tangible Net Worth (TNW) to Rs. 18.04 Crore as of March 31, 2026 [vs. Rs. 13.22 Crore in FY2025].

• High Financial Leverage and Debt Servicing Obligations :

  Capital structure remains highly leveraged due to substantial reliance on project-specific construction term loans and promoter unsecured debt to fund ongoing developments. Total Debt expanded to Rs. 94.58 Crore as of March 31, 2026 (provisional) [vs. Rs. 85.74 Crore in FY2025], comprising Rs. 73.40 Crore in long-term facilities [vs. Rs. 63.14 Crore in FY2025] and Rs. 21.18 Crore in short-term bank borrowings [vs. Rs. 22.60 Crore in FY2025]. On a reported Tangible Net Worth (TNW) basis, Gearing (Total Debt / TNW) stands elevated at 5.24x [6.49x in FY2025], Long-Term Debt / TNW stands at 4.07x [vs. 4.78x in FY2025], and TOL / TNW stands at 7.07x [vs. 14.60x in FY2025]. However, when adjusted for promoter quasi-equity (Unsecured Loans of Rs. 18.69 Crore in FY2026 and Rs. 10.16 Crore in FY2025), Adjusted Tangible Net Worth (ATNW) expanded to Rs. 36.73 Crore [vs. Rs. 23.37 Crore in FY2025], resulting in meaningful credit comfort. Consequently, adjusted leverage metrics show substantial moderation, with Adjusted Gearing (Total Debt / ATNW) easing to 2.57x [vs. 3.67x in FY2025], Long-Term Debt / ATNW at 2.00x [vs. 2.70x in FY2025], and Adjusted TOL / ATNW correcting sharply to 2.96x [vs. 7.82x in FY2025] following the liquidation of buyer advances. Meanwhile, Interest Coverage Ratio (ISCR) adjusted to 2.22x [vs. 19.38x in FY2025] as finance charges increased to Rs. 5.20 Crore [vs. Rs. 0.06 Crore in FY2025] following active loan drawdowns, necessitating sustained collection velocity across ongoing projects to service remaining principal debt repayments of Rs. 140.3 Crore.

• Geographical Concentration Risk :

  All 5 ongoing developments and 4 pipeline projects are concentrated strictly within the Nashik micro-market in Maharashtra. This 100% geographic concentration exposes DIHPL’s cash flows and sales velocity to localized economic downturns, regional oversupply, local regulatory shifts, or demand absorption slowdowns in Nashik.

• Exposure to Real Estate Industry Cyclicality and Construction Cost Inflation :

  DIHPL remains directly exposed to the inherent cyclicality of the Indian real estate market, home loan interest rate movements, and price volatility in key construction raw materials such as steel, cement, aggregates, and specialized labor. Because sale agreements fixed purchase values for the 3,50,279 sq. ft. of contracted area (generating Rs. 166.1 Crore in committed receivables), DIHPL cannot pass on mid-construction cost spikes to existing buyers. Consequently, any sharp increase in civil construction outlays over the remaining project lifecycle (budgeted at Rs. 268.8 Crore across active sites) would directly compress project operating margins, narrow expected cash surpluses, and constrain overall debt-servicing headroom.

Positive Factors

• Execution & Sales Velocity Acceleration: Sustained improvement in sales absorption and customer collection realizations across ongoing developments, alongside timely project execution and completion milestones, ensuring strong self-sustaining cash flow generation.
• De-leveraging & Capital Structure Strengthening: Significant improvement in leverage indicators, demonstrated by the Total Debt to Tangible Net Worth (Gearing) ratio sustaining below 3.50x and TOL/TNW dropping below 4.00x, alongside maintaining a strong unencumbered cash buffer and a lifecycle Cash Flow DSCR above 4.0x.

Negative Factors

• Execution Delays & Debt Expansion: Significant delays in project execution timelines or higher-than-budgeted debt drawdowns leading to deterioration in capital structure indicators, specifically Total Debt / TNW exceeding 6.5x or Interest Coverage Ratio (ISCR) falling below 1.5x.
• Weaker Collections & Liquidity Mismatch: Slower-than-anticipated sales velocity or lower customer collection realizations, resulting in heightened dependence on external debt, cash flow mismatches, or compression of hard outflow coverage below 120%.

The liquidity position of Deepak Infra and Homes Private Limited (DIHPL) is Adequate, supported by expected operational cash flows, committed undisbursed credit lines, and structured debt servicing mechanisms. As of March 31, 2026 (provisional), the company held unencumbered cash balances of Rs. 1.54 Crore alongside an improved Current Ratio of 2.24x [vs. 1.54x as of March 31, 2025]. Total projected lifecycle cash inflows of Rs. 943.6 Crore—comprising customer advances (Rs. 745.5 Cr), undrawn construction limits (Rs. 71.3 Cr), and promoter equity (Rs. 64.2 Cr)—are fully sufficient to cover total project development outlays of Rs. 491.5 Crore and debt obligations of Rs. 191.2 Crore (Rs. 163.1 Cr principal; Rs. 28.1 Cr interest), yielding a comfortable lifecycle average DSCR of 5.0x. Debt servicing across major lenders (Tata Capital, ABHFL, Piramal, PNB) is ring-fenced via mandatory RERA escrow accounts with cash sweeps (10%–75%) and 1–3 month DSRA/ISRA reserves. Under a severe 0% future sales stress scenario, hard cash visibility from committed receivables (Rs. 166.1 Crore), cash reserves, and undrawn loans covers 60% of all future mandatory outlays, with shortfalls backed by promoter equity and cash surpluses from group entity Deepak Builders and Developers (DBD). Working capital limits averaged 94.92% utilization over the 16-month audit period ending August 2026, reflecting active project execution.

The company demonstrates an Adequate ESG profile based on its operational practices, regulatory adherence, and sustainability initiatives across its real estate development projects.

Environmental:

Environmental practices are focused on resource efficiency and sustainable construction. The company integrates RERA-mandated rainwater harvesting systems, sewage treatment plants (STP), and dual-plumbing networks across its major ongoing projects (Three Leaves and Amrapali). Rooftop solar panels are incorporated in commercial developments, including Nathseeta Yeolekar Commercial Tower, to lower common area grid energy consumption. The company systematically segregates and reuses civil construction debris onsite to minimize environmental waste. The company fully complies with State Pollution Control Board guidelines and has zero recorded environmental violations or penalties.

Social:

Social initiatives prioritize site safety, workforce welfare, and community development. The company enforces strict health and safety protocols across construction sites for both permanent staff and contractor labor, remaining fully compliant with Indian labor laws. Key worker welfare measures include health check-up camps, safety training programs, and onsite sanitation facilities. The company also contributes to local community infrastructure development and urban improvement initiatives in Nashik as part of its corporate social responsibility.

Governance:

As a closely held private limited entity, the governance structure reflects strong operational control by the promoter family (Mr. Deepak Kalyanji Chande and Mr. Shubh Deepak Chande). Risk management and internal financial controls are Moderate, supported by mandatory statutory audits and quarterly RERA filings. Conflict-of-interest management is Adequate, with related-party transactions monitored through statutory disclosures. All debt facilities are ring-fenced via RERA-compliant escrow mechanisms across major lenders, ensuring transparent and compliant cash flow utilization.

Deepak Infra and Homes Private Limited (DIHPL) was incorporated on February 3, 2021, as a private limited company to corporatize and consolidate the real estate development operations of the Nashik-based Deepak Builders Group. Promoted by Mr. Deepak Kalyanji Chande, who brings over 35 years of industry experience, DIHPL serves as the primary corporate vehicle for undertaking all prospective residential and commercial real estate developments. Under a strategic corporate realignment, the group’s flagship proprietorship firm, Deepak Builders and Developers (DBD; established in 1989), is winding down new project launches to complete its legacy portfolio, transferring all prospective developments exclusively to DIHPL. This structural consolidation allows DIHPL to fully leverage the group’s established brand equity, extensive contractor networks, and proven market standing in the regional market. DIHPL currently manages an active portfolio of ongoing residential and commercial projects in Nashik, backed by demonstrated execution capabilities and timely RERA deliveries. Liquidity and balance sheet strength are further supported by an extensive land bank and strong ongoing cash flow backstops from group entity completed developments.

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.

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