Detailed Rationale

Crisil Ratings has assigned its ‘Crisil AA-/Stable’ rating to the non-convertible debentures of Keystone Realtors Limited (KRL; part of the Rustomjee group).

 

The business risk profile is supported by buoyant saleability in ongoing projects, strategically planned new launches, strong market position and execution track record. The brand, Rustomjee, has strong brand equity in the real estate market primarily in the MMR region, which supports the salability of its residential real estate projects. The group reported healthy bookings of around 59% of total under construction area as on December 2025 (excluding JV Projects for which corporate guarantee is not given), for which they have received 77% of customer advances. KRL will likely maintain its sales momentum over the medium term backed by its strong business risk profile, and brand recall along with healthy pipeline of upcoming projects.

 

The financial profile is supported by healthy collections of Rs 2621 crore in fiscal 2026 along with healthy cash flow from operations generated by the group over the past few fiscals through fiscal 2026, which has led to moderate reliance on the external borrowings. Driven by the same, the financial risk profile remains comfortable marked by healthy capital structure and cash buffer ratio.

 

Liquidity is further supported by access to funds from the AIF platform, Mt. K Kapital, healthy cash and bank balance of Rs 717 crore as on December 2025.

 

The rating reflects the established market position and brand recall of the Rustomjee group, along with extensive management expertise, strong sales velocity leading to low funding risk and comfortable liquidity and financial risk profile. These strengths are partially offset by exposure to implementation risks in ongoing and upcoming projects and susceptibility to cyclicality in the real estate industry.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of KRL and its subsidiaries, collectively referred to as the Rustomjee group. This is because these entities are strategically important to and have significant operational and financial linkages with KRL.

 

Corporate Guarantee extended for JV debt of Rs 210 crore (outstanding of Rs 73 crore as on 31st December 2025) has been taken as debt.

 

Optionally convertible debentures of Rs 386 crore as on March 31st, 2025, have been treated as neither debt nor equity as the interest on the same is accrued and repayment can be deferred in case of exigencies.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths

Established market position and strong brand name: KRL has been in the real-estate industry for around three decades and has strong execution track record along with established brand name, Rustomjee, in the MMR region. The group follows an asset light business model and primarily undertakes redevelopment projects which reduce its upfront capital investments. The brand, Rustomjee, has strong brand equity in the real estate market primarily in the MMR region, which supports the salability of its residential real estate projects. The group has been witnessing a healthy growth in pre-sales from around Rs 1604 crore in fiscal 2023 to around Rs 3028 crore in fiscal 2025 and has further achieved around Rs 4022 crore in the fiscal 2026, demonstrating a strong sales velocity. Pre-sales should improve further over the medium term, marked by higher bookings and fresh project launches. KRL has developed over 28+ msf of construction  area, focusing on diversified categories from mass-market to luxury housing categories along with undertaking commercial projects as well. The group has 47+ msf of construction in pipeline which underpins the group’s strong market position, supports profitability/cashflows and lends a strong competitive advantage.

 

Comfortable operating efficiency, led by healthy bookings and customer advances for ongoing projects: The Rustomjee group reported healthy bookings of around 59% of total under construction area as on December 2025 (excluding JV Projects for which Corporate Guarantee is not given), currently being developed under 21 projects, for which they have received 77% of customer advances. Overall the group follows a prudent sale policy wherein continuous sales of inventory generates strong cashflow collections. Collections increased to Rs 2621 crores in fiscal 2026 from Rs 1862 crores in fiscal 2023, supported by increasing number of projects. Further, the group maintains a well-diversified project portfolio across various stages of the development cycle including healthy distribution among early, mid and late stage of project cycle. This helps the group maintain adequate cash flows at any given period.

 

Comfortable financial risk profile with comfortable cash flows: Cash flow from operations (CFO; adjusted for future land expenses) was comfortable with debt to CFO and CFO to interest of 0.6 times and 10.5 times, respectively, in fiscal 2025, and is expected to be around 1-1.2 times and 10.5-12 times, respectively, for fiscal 2026. Pending receivables of around Rs 10,000 crores from the on-going projects (excluding JV Projects for which Corporate Guarantee is not given) should cover the pending cost and debt outstanding. Driven by the same, the company is expected to have a cash buffer ratio of above 3.5 times on average over the next three fiscals. The adequacy level is expected to improve further, aided by established market position of the company, strong demand and healthy bookings.

Key Rating Drivers - Weaknesses

Exposure to implementation risk for ongoing and upcoming projects: For the on-going projects, the group is yet to incur costs of around Rs 5400 crores as on December 2025. Further they have upcoming project pipeline of 47+ msf. As these projects are in early stages of construction, the group faces moderate implementation risk. However, it has been executing projects without any major time overruns in the past. Any sharp demand slowdown could adversely impact their execution and cashflows. Hence, timely implementation of these projects and ability of the group to maintain sales momentum will remain monitorable.

 

Susceptibility to cyclicality in the real estate industry in the MMR region: The real estate sector in India is cyclical and affected by volatile prices, opaque transactions, and a highly fragmented market structure Also, its operations and margins remain susceptible to intense industry competition and economic cycles cyclicality in the industry. The group’s operations are concentrated primarily in the MMR region. This may impact revenue if there is any significant slowdown in demand or oversupply in the region and will be a key rating sensitivity factor. Any downfall in the MMR real estate industry, overall recession, inability of the company to maintain projected sales momentum, significant increase in project cost affecting the liquidity among other reasons may affect the implementation of the upcoming projects. Also, further increase in interest rates by banks may impact the demand for the real estate units over the medium term.

Liquidity Superior

The group has superior liquidity for funding the construction of its ongoing projects as well as the upcoming projects through a mix of customer advances, equity infusion and bank loans. The customers’ advances for their ongoing projects have been healthy. Hence, the cash flows from the project are expected to remain sufficient to meet the term debt obligations. The company has a cash buffer ratio of above 3.5 times on average over the next three fiscals. Further, the group had unencumbered cash and cash balances of Rs 717 crore as on Dec 31, 2025, which is free of any lien. The group further benefits from access to funds from their AIF platform, Mt K Kapital which provides upfront capital infusion for new projects, providing financial flexibility to the group.

Outlook Stable

Crisil Ratings believes the company will increase its scale of operations over the medium term, supported by significant launch pipeline along with heathy salability in ongoing projects, while maintaining low leverage.

Rating sensitivity factors

Upward factors

• Significant improvement in scale of operations, with collection sustainably increasing above Rs. 5000 crores per year along with maintaining the sales velocity
• Improvement in the financial risk profile with reduction in debt to CFO on a sustained basis

 

Downward factors

• Significant increase in leverage levels along with slower-than-expected collections or delay in execution
• Weakening of the financial risk profile which includes debt to CFO ratio (adjusted) remaining above 1.5 times on sustained basis

About the Company

KRL (flagship company of Rustomjee group) was incorporated in 1995. The company, along with group companies and joint ventures/subsidiaries, is engaged in the real estate business and develops properties under the brand, Rustomjee, in Mumbai metropolitan regions (MMR), Maharashtra. It has developed over 28+ msf of area, with over 47+ msf in pipeline as of December 2025.

 

KRL is listed on the Bombay Stock Exchange (BSE Limited) and National Stock Exchange of India (NSE). It is promoted and managed by Mr Boman R. Irani (Chairman & Managing Director), Mr Percy Chowdhry and Mr Chandresh Mehta with a professional team.

Any other information: Not applicable