Rating Rationale
August 10, 2022 | Mumbai
Advait Infratech Limited
Rated amount enhanced
 
Rating Action
Total Bank Loan Facilities RatedRs.65 Crore (Enhanced from Rs.25 Crore)
Long Term RatingCRISIL BBB-/Stable (Reaffirmed)
Short Term RatingCRISIL A3 (Reaffirmed)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its CRISIL BBB-/Stable/CRISIL A3’ ratings on the bank facilities of Advait Infratech Limited (AIL).

 

CRISIL Ratings had assigned its ‘CRISIL BBB-/Stable/CRISIL A3’ ratings to the bank facilities of AIL through rating rationale dated July 30, 2022.

 

The ratings reflect the extensive experience of the promoter in the electrical equipment and engineering, procurement and construction (EPC) business. Financial risk profile is likely to remain strong, with comfortable debt protection metrics. These strengths are partially offset by the moderate scale of operations and working capital intensive operations

Analytical Approach: Standalone

AIL has invested into TG Advait India Pvt Ltd for its 33.5% stake and overall operations of this company are managed by its joint venture (JV) partner.

Key Rating Drivers & Detailed Description

Strengths:

Extensive industry experience of the promoter

The two-decade-long experience of the promoter in the EPC business, their strong understanding of market dynamics and established relationships with suppliers and customers, will continue to support the business risk profile. CRISIL Ratings believes that these factors will help AIL scale up its revenue profile and build a strong order book.

 

Healthy financial profile

Capital structure remains healthy, aided by lower reliance on external debt. Hence, gearing and total outside liabilities to adjusted networth ratios were low at of 0.15 and 0.71 time, respectively, as on March 31, 2022. Debt protection measures are also comfortable due to leverage and healthy profitability. Interest coverage and net cash accrual to total debt ratios stood at 12.49 times and 1.09 times respectively, for fiscal 2022.

 

Weakness:

Moderate scale of operations

AIL offers products and solutions for power transmission, substations and telecommunication infrastructure, and also undertakes EPC work for installation of optical ground wire (OPGW). Diversification in the order book has enhanced the revenue profile, yet it is likely to be moderate. The healthy order pipeline offers revenue visibility over the medium term.

 

Working capital intensive operations.

Gross current assets (GCAs) stood at 181 days for the fiscal ended March 31, 2022. The company needs to extend a long credit period in line with industry standards, however receivables include 10% of the EPC contract amount, which is held as retention money for two years. GCAs may remain high over the medium term.

Liquidity: Adequate

Liquidity is marked by sufficient cash accrual and low bank limit utilisation. Expected cash accrual of Rs 9-12 crore should suffice to cover the term debt of Rs 0.8-2.0 crore over the medium term. Bank limit utilisation was also negligible, averaging around 13.92% for the 12 months ended June 30 ,2022. Current ratio was healthy at 1.86 times as on March 31, 2022.

 

Low gearing and moderate networth will continue to provide financial cushion to raise additional debt in case of any adverse conditions or downturn in the business.

Outlook: Stable

CRISIL Ratings believes AIL will continue to benefit from the extensive experience of its promoter in the EPC business, and their established relationships with clients.

Rating Sensitivity Factors

Upward factors

  • Sustained revenue growth along with healthy profitability
  • Better working capital management with gross current assets improving to below 150 days

 

Downward factors

  • Decline in profitability below 9% along with a stretch in the working capital cycle
  • Delay in execution of orders weakening the market position of the company

About the Company

AIL was incorporated in 2010, by the promoter, Mr Shalin Sheth. The company offers products and solutions for power transmission, power substations and telecommunication infrastructure fields, and also undertakes EPC work for installation of OPGW. It is listed on the Bombay Stock Exchange platform for Small and Medium Enterprises.

Key Financial Indicators

As on/for the period ended March 31

Unit

2022

2021

Operating income

Rs.Crore

72.05

58.09

Reported profit after tax

Rs.Crore

7.13

4.84

PAT margin

%

9.90

8.33

Adjusted debt/Adjusted networth

Times

0.15

0.01

Interest coverage

Times

11.69

12.45

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN

Name of instrument

Date of allotment

Coupon rate (%)

Maturity date

Issue size

(Rs.Crore)

Complexity

levels

Rating assigned

with Outlook

NA

Cash Credit

NA

NA

NA

7

NA

CRISIL BBB-/Stable

NA

Term Loan

NA

NA

Sep-2027

6.5

NA

CRISIL BBB-/Stable

NA

Cash Term Loan

NA

NA

Dec-2027

0.6

NA

CRISIL BBB-/Stable

NA

Bank Guarantee

NA

NA

NA

25.2

NA

CRISIL A3

NA

Letter of Credit

NA

NA

NA

6.8

NA

CRISIL A3

NA

Proposed Non Fund based limits

NA

NA

NA

18.9

NA

CRISIL A3

Annexure - Rating History for last 3 Years
  Current 2022 (History) 2021  2020  2019  Start of 2019
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 14.1 CRISIL BBB-/Stable 30-07-22 CRISIL BBB-/Stable   --   --   -- --
Non-Fund Based Facilities ST 50.9 CRISIL A3 30-07-22 CRISIL A3   --   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 1.5 State Bank of India CRISIL A3
Bank Guarantee 10.2 ICICI Bank Limited CRISIL A3
Bank Guarantee 13.5 State Bank of India CRISIL A3
Cash Credit 2 ICICI Bank Limited CRISIL BBB-/Stable
Cash Credit 5 State Bank of India CRISIL BBB-/Stable
Cash Term Loan 0.6 ICICI Bank Limited CRISIL BBB-/Stable
Letter of Credit 6.8 ICICI Bank Limited CRISIL A3
Proposed Non Fund based limits 18.9 Not Applicable CRISIL A3
Term Loan 6.5 State Bank of India CRISIL BBB-/Stable

This Annexure has been updated on 10-Aug-2022 in line with the lender-wise facility details as on 30-Jul-2022 received from the rated entity.

Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
The Rating Process

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