| Likhitha Infrastructure Limited | ||||||
| Ratings reaffirmed at 'Crisil A/Stable/Crisil A1'; Rated amount enhanced for Bank Debt | ||||||
| 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/Crisil A1’ ratings to the bank facilities of Likhitha Infrastructure Limited (LIL; a part of the Likhitha group).
The ratings continue to reflect the extensive experience of the promoters in the oil and gas infrastructure segment, its established market position with a strong order book and healthy financial risk profile. These strengths are partially offset by the moderate scale of operations, large working capital requirement, susceptibility to tender-based operations, economic and industrial cycles. |
Analytical Approach Crisil Ratings has considered the combined financials of LIL and its majority-owned Joint Venture, CPM Likhitha Consortium and Joint Venture, Likhitha Hak Arabia Contracting Company. This is because the entities, together referred to herein as the Likhitha group, are being managed by the same team and operate in the same line of business.
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 promoters and established market position: The Likhitha group is being promoted by Mr. Gaddipati Srinivasa Rao and his family members. Mr. Gaddipati Srinivasa Rao, a first-generation entrepreneur and managing director of LIL, has more than four decades of experience in the Oil and Gas infrastructure segment. The expertise of the promoters, their strong understanding of market dynamics and healthy relationships with suppliers and customers should continue to support the business.
LIL is one of the top Oil and Gas infrastructure providers in India and has vast experience in diversified operations across several geographies such as Karnataka, Delhi, West Bengal, Gujarat, Andhra Pradesh, Telangana, Kerala, Madhya Pradesh, Jharkhand, Bihar, Haryana, Odisha, Uttar Pradesh, Assam, Chattishgarh, Punjab, Tamilnadu, Tripura and Goa. LIL is the first company from India to execute the first-ever Trans-National Hydrocarbon (Multi-product) pipeline project between India and Nepal. LIL is qualified technically and financially (at the highest level) for all the tenders floating in the country in this segment.
Strong order book providing revenue visibility: The group has an order book of Rs 1,200 crore as of March 31, 2025, which is to be executed over the next 24-36 months. Healthy order books provide revenue visibility over the medium term.
Healthy financial risk profile: Networth was strong at Rs. 374 Crore while total outside liabilities to adjusted networth (TOL/ANW) ratio was healthy at 0.13 time as on March 31, 2025. The capital structure has been supported by the absence of any yearly maturing debt, yielding low TOL/ANW ratio of below 0.2 time during the three fiscals ended March 31, 2025. Capital structure is expected to remain strong over the medium term as well due to healthy accretion to reserve and the stance of the management to remain debt free. The debt protection metrics were also healthy, with an interest coverage ratio (interest cost comprises of BG commission and Bank charges) of 83.72 times for fiscal 2025.
Weaknesses: Moderate scale of operations and large working capital requirement: The scale of LIL continues to be moderate, despite being present in the industry for more than two decades and registering strong growth during the past few fiscals. Revenue was Rs 520 crore in fiscal 2025 (which has grown from Rs. 422 Crore in fiscal 2024), supported by healthy execution capabilities coupled with a strong orderbook. Scale has been modest owing to free issue of materials, a model under which pipeline laying contracts under the Oil and Gas infrastructure segment works. The pipelines, which are a major raw material, are being provided by the principal as they want to ensure high quality and hence is not a part of the agreement between LIL and the principal; therefore, this component is not being billed to the customer. Operations are moderately working capital intensive, as indicated by gross current assets of 250-280 days for the three fiscals through 2025. This is majorly driven by higher receivables as the majority of the revenue is being booked during the quarter ends and higher work in progress as the bills are raised on a milestone basis. However, the working capital is efficiently managed with nil reliance on external debt, yielding healthy return on capital employed ratio of 27.77 % in fiscal 2025, which is estimated to remain more than 21% over the medium term.
Susceptibility to tender-based operations and economic and industrial cycles: Revenue and profitability entirely depend on the ability to win tenders. Also, entities in this segment face intense competition, thus requiring bidding aggressively to get contracts. Any downturn in the capex cycle or changes in government policies for the sector could impact order inflow and, hence, the credit risk profile of the group. However, the healthy market position and expertise of LIL coupled with the established relationship with the customers offset the risk to some extent as LIL is likely to receive repetitive orders from the established clientele. Also, growth is strongly correlated with industrial development and investments in key sectors as 100% of revenue comes from clients in the Oil and Gas sector. These sectors also face cyclicality amid fluctuations in crude and gas prices. Given the cyclicality inherent in the industry, the ability to maintain profitability margin through operating efficiency becomes critical. |
Liquidity: Strong Bank limit utilisation is low at around 0 percent for the past twelve months ended March 2025. Cash accrual are expected to be over Rs 70.66-87.05 crore which are sufficient against nil term debt obligation over the medium term. In addition, it will be act as cushion to the liquidity of the company. Current ratio are healthy at 7.92 times on March 31, 2025. Low gearing and moderate net worth support it’s financial flexibility, and provides the financial cushion available in case of any adverse conditions or downturn in the business. |
Outlook: Stable Crisil Rating believes LIL will continue to benefit from the extensive experience of the promoters, their established relationship with clients and its healthy orderbook position. |
Rating sensitivity factors Upward factors
Downward factors
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About the Likhitha Group LIL was incorporated in 1998 and is engaged in the business of pipeline laying providing comprehensive erection, testing, and commissioning of Oil and Gas pipelines, city gas distribution projects, tankage and operations and maintenance services. It is based in Hyderabad, Telangana. The company is listed on the Bombay Stock Exchange and National Stock Exchange of India. Mr. Srinivasa Rao Gaddipati and his daughter, Mrs. Likhitha Gaddipati, are the promoters. |
Key Financial Indicators (Consolidated)
**Interest cost comprises of BG commission and Bank charges |
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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