Rating Rationale
June 12, 2025 | Mumbai
Baazar Style Retail Limited
Rating reaffirmed at 'Crisil A-/Stable'; Rated amount enhanced for Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.171.03 Crore (Enhanced from Rs.127.03 Crore)
Long Term RatingCrisil A-/Stable (Reaffirmed)
Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil A-/Stable’ rating on the long term bank facilities of Baazar Style Retail Limited (BSRL).

 

The rating continues to reflect BSRL’s healthy financial risk profile, improving market position and operating efficiency through geographical diversification. These strengths are partially offset by exposure to intense competition and large working capital requirement.

Analytical Approach:

Crisil Ratings has combined the business and financial risk profiles of BSRL and Konnect Style Retail Pvt Ltd (KSRPL). This is because KSRPL is a wholly owned subsidiary of BSRL and both these entities operate under the same promoters and management.

 

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:

  • Healthy financial risk profile: Financial risk profile should remain supported by healthy accretion to reserves. Networth was healthy at around Rs 463 crore as on March 31st, 2025, as against Rs 259 crore a year earlier. Capital structure has improved over the years with reduced reliance on external debt, credit from suppliers and absence of any significant debt-funded capex as well as steady equity infusion over the years. Thus, gearing is expected at below 1 time and total outside liabilities to tangible networth (TOL/TNW) ratio at 1.10-1.20 times over the medium term. Steady profitability should result in sizeable accretion to reserve, thereby keeping the networth and capital structure comfortable.  Debt protection metrics should also remain comfortable, with interest coverage ratio expected over 6 times and net cash accrual to total debt ratio at 0.40-0.50 time going forward. Gradual decline in debt with better working capital management should further improve the financial risk profile. 

 

  • Improving market position and operating efficiency through geographical diversification: The promoters have more than two decades of experience in the retailing industry, which enabled them to significantly expand market presence from 1 store in 2013 to 217 stores as of March 2025. Backed by the company’s well-established geographical presence, revenue rose to around Rs 1346 crore in fiscal 2025 exhibiting a 38% growth as against the previous fiscal’s revenue level of Rs 975 crore. Healthy growth prospects in the retailing industry specially in Tier 2 and Tier 3 cities, being the company’s primary focus, aggressive expansion strategy (led by opening of over 84 stores in fiscals 2024 and 2025 cumulatively) and increased efficiency in new stores, resulted in healthy overall growth in the scale of operations and should support further growth in its business risk profile. The growth is attributed to higher average ticket size, increased market penetration in existing geographies through sustained same store sales growth of over 12% in fiscal 2025 along with incremental revenue contribution from newly added stores; 52 new stores have been added in fiscal 2024. Continuous focus to establish itself as a brand through strengthening its market position by opening new stores will be crucial for sustaining the revenue growth momentum.

    Better economies of scale through continued addition of new stores and healthy growth in scale of operations, breakeven achieved in new stores and reduction in procurement cost through greater reliance on private labels should keep the earnings before interest, taxes, depreciation and amortisation (EBITDA) margin healthy at around 7-8% over the medium term.

 

Healthy growth in scale of operations shall also support operating efficiency, resulting in steady profitability and return on capital employed ratio.

 

Weaknesses:

  • Exposure to increasing competition: The organised retailing industry is estimated to grow over the medium term driven by new store rollouts, increase in penetration in Tier 2 and 3 cities and increasing disposable income. Healthy growth prospects, high profitability, and ease in procurement have attracted several organised and unorganised players into the domestic retail market. The consequent intense competition may continue to constrain scalability, pricing power and profitability. BSRL will also remain exposed to concentration risk given that the company generates more than ~80% revenue from the garments segment. Sustenance of healthy growth in scale of operations and operating profitability amid exposure to increasing competition shall remain a key sensitivity factor.

 

  • Large working capital requirement: Intense competition in the retailing industry necessitates maintaining large inventory to maintain sufficient inventory due to high stock keeping units at all its retail points and stock at its warehouse so as to sustain adequate footfall in each store. Moreover, with the company’s aggressive expansion strategy through opening up of large number of new stores each fiscal, newer stores require a larger inventory base, which gradually decreases as the store matures, leading to better inventory churning. Moreover, the apparel industry depends on the latest trends, which are everchanging. There arises a need to refresh products in line with shifting consumer preferences. Nevertheless, inventory management over the past three fiscals through fiscal 2025 has improved considerably with focus on optimising production and stocking in line with sales patterns. Average Inventory per square feet has come down significantly owing to maturing of newer stores, leading to better inventory efficiency. The company's centralised warehousing facility in West Bengal also optimises the working capital cycle. Inventory for various departments is procured centrally (based on product wise segregation), thus achieving maximum price advantage. While market position strengthens, prudent working capital management continues to remain crucial to curtail external debt.

 

Consequently, gross current assets are expected at 170-180 days over the medium term, driven by inventory of around 150 days. Going forward, improvement in working capital cycle, while sustaining healthy business risk profile, will remain a key monitorable.

iquidity: Strong

Bank limit utilisation was around 80% over the past twelve months through March 2025 leaving sufficient cushion for exigencies. Cash accrual is expected at Rs 70-80 crore per annum, against yearly repayment obligation of Rs 4-5 crore; thereby aiding financial flexibility. Current ratio is expected to be healthy at around 1.40-1.50 times over the medium term. Healthy unencumbered liquidity in the form of cash and bank balances of around Rs 14 crore as of March 2025 and management’s intention of maintaining similar liquid investments over the medium term further support liquidity. The promoters have ability to extend unsecured loans if needed. Low gearing and comfortable networth also support liquidity.

Outlook: Stable

BSRL should continue to benefit from extensive experience of the promoters and its established market position.

Rating sensitivity factors

Upward factors:

  • Substantial growth in scale of operations and improvement in operating profitability thereby leading to cash accruals of over Rs 65 crore on a sustained basis
  • Improvement in the working capital cycle, led by better inventory and creditor management

 

Downward factors:

  • Any significant and sustained decline in revenue and/or operating margin, resulting in cash accrual falling below Rs 25 crore per fiscal
  • Larger-than-expected capital expenditure (capex) or further stretch in the working capital cycle adversely impacting the liquidity and financial risk profile

About the Group

Incorporated in June 2013,BSRL sells readymade garments, footwear, toys, accessories, cosmetics, luggage, and other household items and home furnishings through its 217 departmental stores as on May 2025, across West Bengal, Odisha, Assam, Uttar Pradesh, Bihar, Jharkhand, Tripura, Andhra Pradesh and Arunachal Pradesh. The stores operate under the brand -- Style Baazar and Express Baazar. BSRL is promoted by Kolkata-based Mr Shreyans Surana (Managing Director), Mr Rohit Kedia, Mr Bhagwan Prasad, Mr Pradeep Kumar Agarwal and Mr Rajendra Kumar Gupta. Daily operations are managed by Mr. Shreyans Surana, with support from other directors and a team of experienced professionals.

Key Financial Indicators

As on/for the period ended March 31*

Unit

2025**

2024

Operating income

Rs crore

1346

975

Reported profit after tax (PAT)

Rs crore

32

29.62

PAT margin

%

2.37

3.04

Adjusted debt/adjusted networth

Times

0.37

0.69

Interest coverage

Times

6.18

5.09

*Crisil Ratings’ adjusted financials as per iGAAP

**Interim financials

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 and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. 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 Outstanding with Outlook
NA Cash Credit NA NA NA 106.00 NA Crisil A-/Stable
NA Fund-Based Facilities NA NA NA 40.03 NA Crisil A-/Stable
NA Term Loan NA NA 31-Mar-32 3.97 NA Crisil A-/Stable
NA Term Loan NA NA 31-Mar-32 21.03 NA Crisil A-/Stable

Annexure – List of entities consolidated

Names of Entities Consolidated

Extent of Consolidation

Rationale for Consolidation

Baazar Style Retail Limited

100%

Holding company with significant business, operational and financial linkages

Konnect Style Retail Pvt Ltd

100%

100% wholly owned subsidiary of Baazar Style Retail Limited
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 171.03 Crisil A-/Stable 12-05-25 Crisil A-/Stable 17-04-24 Crisil A-/Stable 19-06-23 Crisil BBB+/Positive 29-04-22 Crisil BBB+/Stable Crisil BBB+/Stable
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit 52 Axis Bank Limited Crisil A-/Stable
Cash Credit 30 HDFC Bank Limited Crisil A-/Stable
Cash Credit 24 State Bank of India Crisil A-/Stable
Fund-Based Facilities 40.03 ICICI Bank Limited Crisil A-/Stable
Term Loan 21.03 Axis Bank Limited Crisil A-/Stable
Term Loan 3.97 Axis Bank Limited Crisil A-/Stable
Criteria Details
Links to related criteria
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)
Criteria for consolidation

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