Detailed Rationale Due to inadequate information and in line with the Securities and Exchange Board of India guidelines, Crisil Ratings had migrated its rating on the long-term bank facilities of Chandan Healthcare Limited (CHL) to ‘Crisil BB-/Stable Issuer Not Cooperating’. However, the management has subsequently started sharing requisite information, necessary for carrying out comprehensive review of the rating. Consequently, Crisil Ratings is migrating the rating on bank facilities of CHL to ‘Crisil BBB-/Stable’ from ‘Crisil BB-/Stable Issuer Not Cooperating'
The rating continues to reflect the extensive experience of the promoter in the healthcare industry, and the moderate financial risk profile of the company. These strengths are partially offset by working capital-intensive operations and limited track record of sustenance of operating profitability. |
Analytical Approach Crisil Ratings has combined the business and financial risk profiles of CHL, Chandan Pharmacy Ltd (CPL) and Indra Diagnostic Centre & Blood Bank Ltd (IDCBBL). This is because IDCBBL is a wholly owned subsidiary of CHL and the latter holds 53% stake in CPL.
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: Extensive experience of the promoter: The three-decade-long experience of the promoter in the healthcare industry, their strong understanding of market dynamics and established relationships with suppliers and customers, will continue to support the business risk profile. This has aided sustained improvement in the business risk profile of CHL, supported by steady growth in revenue and operating margin. Revenue recorded a compounded annual growth rate (CAGR) of 24% over the three fiscals ended March 31, 2024, and is projected to show a further year on year growth of 30-35% to around Rs 215-225 crore during fiscal 2025; revenue is estimated to be around Rs 167 crore till December 2024. Revenue growth will be aided by expansion of network and the addition of new customers. Further, the operating margin is expected to sustain around 15-16% in fiscal 2025, backed by healthy collections at new centers. In March-2025, the group acquired X-Life diagnostics for Rs 6.75 crore which owned a diagnostic center at a prime location in Patna, Bihar which is running profitably. Management is targeting to open 3 additional centers each year in order to continuously grow and expand its reach. Sustained improvement in the scale of operations while sustaining healthy margins amid expansion of the network would remain monitorable
Healthy financial risk profile: The financial risk profile is marked by moderate networth and gearing projected to be in the range of Rs 135-140 crore and below 0.4 time, respectively, as on March 31, 2025, as against Rs 44 crore and 0.95 time, respectively, a year before. Improvement in networth will be supported by funds raised through the IPO, amounting to Rs 107 crore in February 2025, and steady accretion to reserves. The sustaining operating margin and limited dependence on bank debt kept debt protection indicators healthy, with interest coverage projected to be 8-9 times for fiscal 2025. In the absence of any debt-funded capital expenditure plans, the financial risk profile is expected to remain comfortable over the medium term.
Weaknesses: Working capital-intensive operations: Gross current assets (GCAs) stood at 119 days as on March 31, 2024, driven by receivables of 58 days and inventory of 47 days. GCA days are likely to remain around 100-110 days over the medium term, as payments from government departments under the National Health Mission, are generally received within 60-90 days. This has led to higher working capital requirement and higher utilization of bank lines, however, post fundraising in Feb-2025, the same has been moderated. Going forward, efficient working capital management, leading to moderation in bank limit utilization, will be a key monitorable. |
Liquidity: Adequate Bank limit utilization is around 78 percent for the past twelve months ending March-2025. Cash accrual are expected to be over Rs 20-28 crore which are sufficient against term debt obligation of Rs 5-7 crore over the medium term. In addition, will act as a cushion to the liquidity of the company. The current ratio is around 0.8 times on March 31, 2024. The promoters are likely to extend support in the form of equity and unsecured loans to meet its working capital requirements and repayment obligations. |
Outlook: Stable Crisil Ratings believes CHL will continue to benefit from the extensive experience of its promoter in the healthcare industry and established relationships with clients. |
Rating Sensitivity Factors Upward factors:
Downward factors:
|
About the Group Incorporated in 2003, CHL provides diagnostic services related to radiology, pathology, cardiology, health check-ups, electromyogram, electroencephalogram, audiometry, endoscopy, pulmonary function test, allergies, auditory brainstem response, electromyography, nerve conduction velocity and bone mineral density. The company also operates pharmacies and a blood bank. Promoted by Dr Amar Singh, CHL is present in Uttar Pradesh, Delhi and Uttarakhand. CPL, incorporated in 2018, trades in medicines and owns and runs retail pharmacy units, with more than 50% stake held by CHL. IDCBBL runs a diagnostic centre Agra and Gorakhpur. |
Key Financial Indicators- Consolidated*
*Crisil Ratings adjusted financials |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
Annexure – List of Entities Consolidated
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
* - Issuer did not cooperate; based on best-available information
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||
|
Criteria Details
|