Rating Rationale

Brickwork Ratings has assigned the long-term rating of BWR BB and short-term rating of BWR A4, with a stable outlook for the bank loan facilities amounting to Rs 15.00 Crores of Khanday Projects Private Limited. The 'Stable' outlook reflects BWR's expectation that the company will maintain its steady credit profile, driven by a healthy unexecuted order book of Rs. 38.76 crore that provides strong near-to-medium-term revenue visibility. The outlook is further supported by the company's improved scale of operations, comfortable debt coverage metrics including a DSCR of 1.76x, and a resilient capital structure with no external secured long-term debt. Furthermore, BWR anticipates that KPPL will continue to benefit from group operational synergies and segment diversification, provided it maintains timely project execution and effectively manages its stretched working capital cycle amid its reliance on government receivables.

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

• Moderate Financial Risk Profile :

  The company's financial risk profile remains moderate, supported by consistent internal accrual generation and strengthening of its capital base. TNW increased from Rs. 7.92 crore in FY24 to Rs. 9.16 crore in FY25 and further to Rs. 9.76 crore in FY26 (Prov), primarily supported by profit retention. Despite the increase in scale of operations, total debt-to-TNW remained moderate at 1.73x in FY26 (Prov), while TOL/TNW 2.11x. The company has also demonstrated improvement in absolute profitability, with PAT increasing to Rs. 0.66 crore and net cash accruals to Rs. 0.72 crore in FY26 (Prov).

• Established Track Record with Moderate Order Book with Revenue Visibility :

  KPPL’s promoters have established an operating track record in Jammu and Kashmir for over three decades in the civil construction and EPC segment, supported by an established execution platform leading to a strong understanding of market dynamics, with repeat clientele such as NHIDCL, CPWD, IRCON, etc and healthy customer-supplier relationships. The company has an unexecuted order book as of August, 2026 of Rs. 38.76 crore, which is 1.61 times FY26(Prov) revenue, providing medium-term revenue visibility.

• Inherent exposure to the tender-driven and competitive nature of the EPC industry :

  The company remains exposed to the inherent risks associated with the competitive and tender-driven nature of the EPC infrastructure industry, including variability in order inflows, intense competition, aggressive bidding, execution delays, cost overruns, and dependence on timely approvals from government authorities. Profitability remains susceptible to changes in input prices, labour costs, project mix and execution efficiency. Any sustained moderation in order inflows or delays in project execution could adversely impact revenue growth, profitability and cash accruals.

• Working capital intensive nature of EPC operations :

  The EPC business is inherently working capital intensive, with funds typically being deployed towards mobilisation, procurement, labour and execution costs ahead of receipt of milestone-based payments. The industry is also exposed to delays in certification and payment from government departments, PSUs and other institutional customers, which can result in elongation of receivable cycles and increased reliance on working capital borrowings. Consequently, timely realisation of receivables and efficient working capital management remain critical to maintaining liquidity and financial flexibility.

• Client and Geographic Concentration Risks :

  The company's revenue stream and future cash flows are heavily exposed to significant concentration risks. Geographically, despite recent expansion efforts into other states, operations remain deeply anchored in Jammu & Kashmir, which still accounts for the majority of sales and the unexecuted order book. This leaves the firm vulnerable to regional geopolitical disruptions and severe weather-induced seasonality. Concurrently, the business faces acute client department concentration, with a select few government counterparties such as CPWD, PMGSY, and IRCON covering the vast majority of the unexecuted order book. This reliance on a specific region and a limited number of government departments heightens the risk of revenue stagnation if there are localized administrative delays, departmental budget constraints, or site handover issues. This intense geographic and client concentration means that any unfavorable shift in state-level infrastructure policies, budget constraints, or administrative delays can severely impact the operational trajectory of the company. To achieve sustainable long-term growth, expanding the operational scale and diversifying the customer base across different geographies remain key strategic priorities.

Positive:
Improvement in the financial risk profile, demonstrated by TOL/TNW below 1.5x, could lead to a rating upgrade.

Negative:
Sustained decline in revenue or operating margins, causing further weakening of the credit profile and a TOL/TNW above the current level of 3x, could result in a rating downgrade.

The entity's liquidity remains adequate. FY 26 (Prov) cash and cash equivalents of Rs 0.24 Cr, and expected operational accruals of Rs 0.72 Cr, with no long-term obligations. Liquidity is further supported by average fund-based bank limit utilization of around 65%; non-fund-based bank limit utilization of around 70%, with a current ratio of 1.59x in FY 26 (Prov), providing a sufficient cushion. The debt protection metrics of the company are at a comfortable level, with ISCR and DSCR as of FY 2026 (Prov), 1.82x and 1.76x, respectively.

The company demonstrates ESG profile: Evolving based on its environmental, social, and governance practices.
Environmental: The company’s environmental performance is assessed through green building certifications, energy efficiency measures, and adoption of renewable energy sources like solar panels or green power, which is not applicable to the entity. Water management and waste reduction practices, including rainwater harvesting, wastewater recycling, and recycling/reuse of construction waste, are also important. Climate risk exposure and resilience measures, such as flood protection or heat-resistant materials, are evaluated. Compliance with environmental regulations and any history of violations or penalties are in line with the rules.
Social: Social considerations focus on workforce health and safety for both permanent and contractor staff, adherence to labour laws are compliant, safety performance, and training or human capital development programs. Diversity and inclusion are favourable, and community engagement initiatives, including local community programs, affordable housing, or livelihood support, are implemented, reflecting the company’s commitment to social responsibility.
Governance: Governance is supported by experienced promoters and escrow-backed structures that support financial discipline. However, the partnership structure leads to concentrated decision-making, and formal ESG committees and advanced governance disclosures are limited. Overall governance is adequate but can improve with greater formalisation and transparency. Governance assessment considers board composition, risk management, and compliance.

Khanday Project Private Limited (KPPL), incorporated on 4th March 2021, is a civil construction and infrastructure development company based in Anantnag, Jammu and Kashmir. Owned and managed by Ghulam Mohammad, Javid Ahmad, Feroz Ahmad, and Ali Mohammad Khanday, KIPL specializes in construction, renovation, and upgrading of roads, bridges, tunnels, and canal works. The company actively undertakes diverse civil engineering projects and government contracts, executing everything from specialized reinforced cement concrete (R.C.C.) with post-tensioned concrete works and structures to rock-cutting and waterproofing works.

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 an institutional investor in Brickwork.

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