| Alpha Design Technologies Private Limited | ||||||
| Rating outlook revised to 'Positive', Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has revised the outlook on the ratings of Alpha Design Technologies Private Limited (ADTPL; part of the Alpha Group) to ‘Positive’ from ‘Stable’ while reaffirming the long-term rating at ‘CRISIL A-’ and short-term rating at ‘CRISIL A2+’.
The outlook revision reflects CRISIL Rating’s belief that the group’s business risk profile will remain comfortable over the medium term with steady growth in revenues and sustained operating profitability. The revenues grew by a compounded annual growth rate (CAGR) of 27 percent to Rs.452 crore for the last 4 years ended March 2021. The group has already reported revenues of Rs.565 crore for the 9-month ended December 2021. Supported by a confirmed order book of over Rs.5000 crore as on 28th February 2022, the revenues are expected to grow at a healthy CAGR over the medium term, while sustaining operating profitability in the range of 14-15 percent. Improvement in business risk profile shall aid the group to report cash accrual of close to Rs.100 crore anually; that shall be adequate to meet repayment obligations of Rs.10-15 crore. Financial risk profile continues to remain comfortable with gearing of 0.35 times estimated as on March 31, 2022
The rating reflects the group’s established market position in the defense segment, further strengthened on account of synergies from being part of the Adani group. The ratings also factor in the group’s diverse product profile and its comfortable financial risk profile. These strengths are partially offset by ADTPL’s working capital intensive nature of operations and customer concentration in revenue profile. |
Analytical Approach For arriving at the ratings, CRISIL has combined the business and financial risk profiles of ADTPL and its subdiaries, (Alpha-Tocol Engineering Services Pvt Ltd, Alpha Elettronica Defence Systems Pvt Ltd, Reline Thermal Imaging and Software Pvt Ltd, Microwave & Optronics Systems Pvt Ltd) and its joint venture, Alpha-Elsec Defence & Aerospace Systems Pvt Ltd (collectively referred to as the Alpha group) on account of strong financial and operation fungibilities along with a common management. Further, CRISIL has used group notch up framework to factor in available financial flexibilities, strong managerial and operational support ADTPL receives from being part of the 'Adani group
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
Supported by the synergies of the Adani group from December 2018, the group’s unexecuted order book has grown is strong at around over Rs.5000 crore. The large order book provides healthy revenue visibility over the medium term. The Alpha group is expected to continue to benefit from its established market position and synergies of the Adani group over the medium term.
Weaknesses:
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Liquidity: Strong Liquidity remains adequate, supported by healthy cash accruals against repayment obligations and moderate bank limit utilization. Bank limit utilisation is moderate at around 65 percent for the past twelve month ended December 2021. The company is expected to generate cash accrual of around Rs.100 crore over the medium term against repayment obligations of around Rs.10-15 crore There are no major debt funded capital expenditure (capex) plans over the medium term, resulting in likely deleveraging for the company. Liquidity will also be supported by need based funding support in the form of unsecured loans/equity from the promoters. The liquidity is expected to remain adequate over the medium term. |
Outlook: Positive CRISIL Ratings believes that Alpha group will continue to benefit by being part of Adani group and established relationships with clients |
Rating Sensitivity factors Upward factors
Downward Factors
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About the Company ADTPL was set up by Retired Colonel H S Shankar in Bengaluru in 2003. Currently, around 57 per cent of ADTPL's shares are held by Vasaka Promoters and Developers Pvt Ltd, a special purpose vehicle promoted by the Murugappa group and the Karvy group who have invested in their personal capacity. 26 percent is held Adani Defence Systems and Technologies Limited (a wholly owned subsidiary of Adani Enterprises Limited) and the balance by foreign institutional investors. The company designs, manufactures, and tests electronic, electrical, optical, and telecommunication equipment for the defense sector. |
Key Financial Indicators
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| 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)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||
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This Annexure has been updated on 07-Mar-22 in line with the lender-wise facility details as on 07-Dec-21 received from the rated entity.
Criteria Details
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