| Competent Automobiles Company Limited | ||||
| Rating reaffirmed at 'Crisil A-/Stable' | ||||
| Rating Action | ||||
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| 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 Competent Automobiles Company Limited (CACL).
The rating continues to reflect the established market position of the group in the automobile (auto) dealership market in Delhi, Haryana and Himachal Pradesh, and healthy financial risk profile of the group. These strengths are partially offset by exposure to intense competition and concentration risk associated with the principal supplier, Maruti Suzuki India Ltd (MSIL; ‘Crisil AAA/Stable/Crisil A1+’). |
Analytical Approach Crisil Ratings has evaluated the consolidated business and financial risk profiles of CACL and its wholly owned subsidiary, Competent Kashmir Automobiles Pvt. Ltd. Unsecured loans of Rs 5 crore, as on March 31, 2025, have been treated as debt as these are expected to be paid off over the medium term.
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: Established market position: The business risk profile of CACL continues to be supported by its established market position and long-term relationship of more than three decades with MSIL. The group is currently operating 43 showrooms, both in Arena and Nexa segments, and workshops in Delhi, Haryana, Himachal Pradesh, Noida and Kashmir, which has helped the group witness volumetric growth over the years. As a result, the group grew at compound annual growth rate (CAGR) of 20% over the three fiscals through 2025. Going ahead, the business risk profile will continue to remain supportive of the established market position of the group.
Healthy financial risk profile: The capital structure has been comfortable, as reflected by total outside liabilities to tangible net worth (TOLTNW) ratio of 1.19 times as on March 31, 2025. The capital structure is slightly leveraged on account of increase in utilization of channel financing owing to inventory buildup. In the ongoing fiscal, with no major debt-funded capital expenditure (capex) and accretion to reserves, the capital structure is expected to remain comfortable with TOLTNW ratio expected at 1.0-1.1 times as on March 31, 2026, providing headroom to take additional debt for business requirement. The debt protection metrics have also been healthy in the past and will continue to remain so over the medium term as well. The interest coverage and net cash accrual to adjusted debt (NCAAD) ratios were 2.88 times and 0.17 time, respectively, as on March 31, 2025. With no debtfunded capex proposed to be undertaken over the medium term and operating margin expected to be range-bound at 3.9-4.0%, the overall financial risk profile will continue to remain healthy.
Weakness: Exposure to intense competition and concentration risk associated with the principal supplier: The exclusive dealership for vehicles manufactured by MSIL makes CACL vulnerable to decline in revenue and profitability of the principal. Furthermore, non-exclusivity in the Delhi region exposes the group to competition from other MSIL dealers, in addition to dealers of other original equipment manufacturers (OEMs) in the auto sector. The risk of intense competition is expected to be mitigated by the launch of new showrooms in Jammu & Kashmir and Uttar Pradesh (UP) regions, which will help the group further increase its scale of operations. The operating income of the group was Rs 2,139 crore in fiscal 2025. The on-year growth in revenue and volume (2%) remained muted in the previous fiscal, owing to the slowdown in the auto sector. However, the group is expected to book revenue of Rs 2,300-2,400 crore in fiscal 2026, backed by volumetric growth of 6-7%, on account of incremental sales from new showrooms and increase in revenue from ancillary services. Sustained improvement in the scale of operations, amid stiff competition from OEMs of other brands, further strengthening the overall market position of the group, would therefore remain a key rating sensitivity factor. |
Liquidity: Strong Bank limit utilization was low at 77.84% on average for the 12 months through May 2025. Cash accrual is expected to be Rs 60-70 crore which will be sufficient against term debt obligation of Rs 0.5-1 crore over the medium term, and the surplus will cushion the liquidity of the group. The current ratio was moderate at 1.09 times as on March 31, 2025. The promoters are likely to extend support in the form of equity and unsecured loans to meet the working capital requirement and debt obligation. |
Outlook: Stable CACL will continue to benefit from its established market position in the auto dealership business in Delhi, Haryana and Himachal Pradesh, and its healthy relationship with MSIL. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company CACL was incorporated in 1985 by Mr Raj Chopra. The company raised funds through a public issue in 1996. It is an authorised dealer for MSIL in Delhi, Haryana, and Himachal Pradesh. It is listed on the Bombay Stock Exchange. |
About the Group CACL was incorporated in 1985 by Mr Raj Chopra. The company raised funds through a public issue in 1996. It is an authorised dealer for MSIL in Delhi, Haryana, and Himachal Pradesh. It is listed on the Bombay Stock Exchange. The wholly owned subsidiary was incorported in March 2024, and was operational in March 2025, for diversification of geography. The group has two showrooms in Kashmir. |
Key Financial Indicators
*Provisional |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
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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Criteria Details
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