Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AA-/Stable/Crisil A1+' ratings on the bank facilities and commercial paper of Infiniti Retail Limited (IRL).

 

Also, Crisil Ratings has withdrawn its rating on Rs 300 crore of long-term loan facility and on Rs.1 crore of non-fund based facility at the company’s request and receipt of requisite documents from the company. The withdrawal is in line with the Crisil Ratings policy on withdrawal of bank loan ratings.

 

IRL’s revenue grew  by ~7% on-year to Rs.19084 crore in fiscal 2025. The growth remains driven by new store addition while the same store sales growth remained flattish for the second consecutive year. Number of stores increased to 564 in fiscal 2025 from 490 in last fiscal leading to expansion of IRL’s footprint across India. Going forward, revenue growth will be supported by continuing addition of ~100 stores annually, expected revival in the same store sales growth will further aid to the overall growth momentum. Expected increase in sales of mobile phones / laptop, contributing around 47% of the overall revenue, is expected to drive the revenue growth in medium term.

 

IRL achieved operating profit at post Ind-AS basis of Rs.277 crore for the first time post incurring losses for three consecutive years. However, it continued to incur operating losses at pre Ind-As levels, though narrowing to Rs.337 in fiscal 2025 (Rs.645 crore in fiscal 2024). The same is attributable to flat sales growth from the existing stores and stores added over the last two years still under gestation with breakeven time at 12-18 months; nearly 230 stores of the total store count of 564 stores as on March 31, 2025, have got added over the past two years. With these newly opened stores achieving breakeven, benefits accruing from various cost reduction initiatives already implemented by the company and the expected improvement in same stores sale growth, the company is expected to achieve breakeven at profit before tax in fiscal 2026. Achieving the same and its sustenance will be a key monitorable in the near to medium term.

 

Regular equity infusion from Tata Digital Pvt Ltd (a wholly owned subsidiary of Tata Sons Pvt Ltd [Crisil AAA/Stable]) continues to support the company’s operating performance and strengthen the capital structure. The ratings centrally factors in the strong support of ultimate parent Tata Sons that will continue through timely infusion of equity to fund its cash losses thus providing comfort to IRL’s overall credit risk profile. Tata Sons had regularly infused funds in the form of equity and preference shares with recent infusion of Rs.1000 crore in fiscal 2025 through Tata Digital. Further, being part of TATA group, IRL enjoys financial flexibility and has been able to raise funds at competitive rates. The credit metrics remained subdued bearing the brunt of operating losses in fiscals 2023 and 2024 thereby leading to weak capital structure and debt protection metrics.

 

Liquidity position of the company remained strong owing to expectations of need-based support from parent which has been amply demonstrated in the past. Company has unencumbered cash surplus of Rs.42 crore as on March 31, 2025. Further, with average utilisation of 75% in the overall working capital limits for past 12 months ended March 2025, unutilised limits will provide cushion for any exigencies.

 

The ratings also reflect IRL’s strong market position in the consumer electronics retail segment and healthy long-term growth prospects for the organised retail sector. These strengths are partially offset by continued operational losses, stretched financial risk profile, exposure to competition from online and offline channels and susceptibility of the operating performance to economic downturns.

Analytical Approach

Crisil Ratings has applied its parent notch-up framework to factor in the support from Tata Sons, which is the parent of Tata Digital, which holds 100% in IRL and has shown a healthy track record of support. Non-cumulative optionally convertible redeemable preference shares infused by Tata Digital (Rs 2,000 crore) in past two fiscals bearing 0.0001% interest convertible at option of issuer up to 20 years has been treated as equity. Adequate support is expected in case of any exigency, as IRL is strategically important to the parent, as reflected in the large expansion plan to leverage the healthy growth expected in the consumer retail segment.

Key Rating Drivers & Detailed Description

Strengths:

Strong support from Tata Sons: IRL, is strategically and economically important to the Tata group. With a strong focus of the Tata group on expanding its footprint in retail segment, IRL is expected to remain important to the group and continue receiving timely need-based support. IRL receives operational, managerial and financial support from Tata Sons, with overall equity of Rs.3790 crore as on March 31, 2025 (including recent infusion of Rs.1000 crore in fiscal 2025 through Tata Digital). Tata Sons has an excellent track record of extending need-based support to subsidiaries and group companies, as seen in the case of Tata Teleservices Ltd (TTSL; ‘Crisil AA-/Stable/Crisil A1+’) and Air India Limited (Crisil AAA/Stable/Crisil A1+).  Crisil Ratings understands that the Tata group through Tata Digital will continue to own IRL (100% ownership) and will assist the company in meeting its obligations in full and on time.

 

Strong market position in the consumer electronics retail segment: Presence of over 15 years in the consumer electronics retail segment resulted in healthy scale of operations, with revenue crossing Rs 19,000 crore in fiscal 2025 despite strong competition from regional and national chains and heavy discounting in online channels. It is further adding stores across formats and enhancing product and service offerings to boost revenue and profitability.  The company has expanded across Tier-1/Tier-2 cities with total store count of 564 stores as on March 31, 2025 and has expansion plan of ~100 stores per fiscal over the medium term.

 

Weaknesses:

Weak financial risk profile: The Company reported operating profit in fiscal 2025 post incurring operational losses for three consecutive three fiscals owing to aggressive expansion. Owing to continuous losses, the adjusted networth remained negative. Total external borrowing remained stable to Rs.3693 crore as on March 31, 2025 in line with previous fiscal. During FY25, Company funded operational losses and capex requirements through equity infusion of Rs.1000 crore by parent. While higher-than-anticipated debt-funded capex will remain monitorable, the Company has recalibrated its expansion strategy to focus on profitable growth. Debt protection metrics, though showing gradual improvement, is expected to remain weak in the medium term due to lower profitability. Interest coverage is expected to remain subdued at below 1x over the medium term, with ongoing efforts to enhance operating performance.

   

Operating efficiency remaining low because of store expansion: IRL demonstrated healthy performance until 2019 supported by change in brand and product mix transition. However, store expansions, investments in supply chain and information technology capabilities coupled with the Covid-19 pandemic-related disruption led to pressure on margins. Due to continued operational losses, higher proportion of new store and additional investments for expansion, return on capital employed (RoCE) remained impacted. However during fiscal 2025, Company reported post-IndAS EBIDTA of ₹277 crore after three fiscals of losses. With improving demand trends, a growing contribution from matured stores, and enhanced cost optimization, profitability and operating efficiency are expected to improve gradually over the medium term.

 

Exposure to risks related to sizeable expansion over the medium term: During fiscal 2025, the Company expanded its total store count to 564, up from 490 in the previous fiscal, marking a net addition of 74 stores. While expansion is expected to moderate over the medium term, the Company plans to add approximately 100 stores annually, depending on property availability and market demand. The expansion strategy is focused on deepening penetration in existing markets while selectively entering new geographies. With a new store generally having a gestation period of 12-18 months, counterbalancing of gestational losses with same store sales growth and turnaround of stores added in previous fiscal will remain monitorable. While the company has been working towards enhanced site selection, and faster ramp up which is gradually improving its gestation period, exposure to risks associated with implementation and execution of the expansion plans will likely persist over the medium term. Company's and parents’ past experience will help in partially navigating through these challenges.

 

Susceptibility to competition from online and offline channels: The Company has established a strong pan-India presence, spanning over 200 cities, reflecting its deepening market reach and growing customer base. While IRL’s store expansion strategy is aligned with both demand and competition dynamics, it remains attentive to potential region-specific challenges, evolving market structures, and competitive pricing strategies adopted by peers. The retail landscape continues to be competitive, with presence of large national players like Reliance Digital and Vijay Sales, as well as strong traction from online platforms such as Amazon and Flipkart. Looking ahead, the company’s ability to navigate competitive pressures and macroeconomic volatility while sustaining healthy operating profitability will remain a monitorable.

Liquidity: Strong

Liquidity is supported by need-based equity infusion from the parent and financial flexibility to raise funds in a timely manner at attractive interest rates. on account of being a step-down subsidiary of Tata Sons. Further, Company has average utilisation of 75% in the overall working capital limits for past 12 months ended March 2025.. Unencumbered cash surplus of Rs.42 crore as on March 31, 2025, unutilized bank lines, limited cash accrual and refinancing of existing long term debt will cover debt obligation as well as the incremental working capital and capex requirement. In case of any shortfall, timely support from parent is expected to be received over the medium term.

Outlook: Stable

Crisil Ratings expects IRL to steadily ramp up its business performance, supported by improvement in same-store sales growth, leading to healthy profitability and cash generation over the medium term. The revenue trajectory is expected to benefit from a combination of continued store expansion and operating leverage from existing stores achieving breakeven. While the financial risk profile and debt metrics are gradually improving, they are currently tempered by residual gestation losses from past expansion phases. Timely support from the parent is also expected to be forthcoming to tide over any financial exigencies as well as manage capex and working capital requirement.

Rating sensitivity factors

Upward factors

• Increase in revenue, backed by successful roll-out and ramp-up of new stores and sustenance of operating profitability, with operating margin above 3% (pre Ind-AS) on a sustained basis
• Healthy improvement in the key credit metrics, supported by better cash generation

 

Downward factors

• Lower-than-expected equity infusion, leading to higher debt and weakening of the capital structure
• Continued sub-par performance because of intense competition, weak demand and gestation losses of new stores, resulting in losses at EBITDA level
• Downgrade in the credit rating of ultimate parent, Tata Sons by 1 or more notch

About the Company

IRL, a 100% subsidiary of Tata Digital , which in turn is a wholly owned subsidiary of Tata Sons, started operations in fiscal 2007 under the Croma brand. The company is one of the first organised consumer durables and electronics retailers in India and has strategic alliance with Australia’s largest retailer, Woolworths. As on March 31, 2025, it had 564 Croma retail outlets across India. The stores are mainly operated on a lease basis and spread across 170+ cities in India. The support office is in Mumbai.

Key Financial Indicators

Particulars	Unit	2025	2024
Reported revenue	Rs crore	19,084	17,867
Profit after tax (PAT)	Rs crore	(1091)	(987)
PAT margin	%	(5.7)	(5.5)
Adjusted gearing (pre Ind-AS)	Times	N.M.	N.M.
Interest coverage (pre Ind-AS)	Times	N.M.	N.M.

NM – Not Meaningful

Any other information: Not Applicable