| Poct Services | ||||||
| Ratings upgraded to 'CRISIL BBB+/Stable/CRISIL A2'; Rated amount enhanced | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has upgraded its ratings on the bank facilities of Poct Services (PS; part of the Poct group) to ‘CRISIL BBB+/Stable/CRISIL A2’ from ‘CRISIL BBB/Stable/CRISIL A3+'.
The upgrade factors in the improvement in the group’s business risk profile backed by steady increase in revenue and stable profitability. Revenue, estimated at Rs. 520 crores in the fiscal 2022, reported compound annual growth of 15% during past three fiscals, with operating margins at 25-27%. Additionally, company’s working capital management is efficient, though group’s GCA remains high at 218 days, prudent debtor realization and inventory turnover has resulted in low reliance of bank lines averaging at 70% over past 12 months through March’22.
The upgrade also factors group’s healthy financial risk profile of the group, supported by steady accretion to reserve. Furthermore, group has planned a capital expansion (Capex) of Rs. 132.68 crore to set up manufacturing unit for reagent, critical care instruments and consumables. Though group is planning to fund the capex by bank debt to the tune of 60%, resulting from healthy net worth, groups capital structure is expected to remain comfortable amid infusion of bank debt for the capex.
The ratings reflect the established market position, group’s diversified revenue profile and its strong financial risk profile. These strengths are partially offset by large working capital requirement and moderate scale of operations. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of PS, Q-Line Biotech Pvt Ltd (QLBPL) and Heidelco Medicore Pvt Ltd (HMPL). This is because all these entities, collectively referred to as the Poct group, are managed by the same promoters and have strong business and financial linkages.
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: Resulting from promoters’ experience of over two decades in the medical equipment trading industry and strong relationship with key suppliers and customers, group’s business risk profile is strongly benefited. Operating income stood at Rs. 520 crores in fiscal 2022, compared with Rs. 338 crores in fiscal 2021, driven by boost in demand resulting from the Covid-19 pandemic. Additionally, resulting from increased demand and benefit expected due to strong established market position, group is planning a Capex of Rs. 132.68 crores to increase its manufacturing capacity in reagents, consumables, medical devices, and critical care instruments.
Diversified revenue profile: The group derives revenue from multiple sources, such as reagents, equipment, and laboratory services, which support the market position despite challenges. This diversification helped the group survive the pandemic, especially when sales from reagents declined. It was able to sustain the topline by increasing sales of critical care equipment. Going forward with stabilization of demand boost in critical care instrument, groups topline is expected to be supported by rise in demand in reagent along with increased demand in laboratory instruments.
Weakness:
Moderate scale of operations: While group has witnessed a healthy CAGR of 15% over the past three fiscal, Groups revenue remain to be moderate at Rs. 520 crores for fiscal 2022. Though the increase in revenue was driven by boost in demand of critical care equipment amid Covid-19, with stabilization in demand boost on account of Pandemic, sustenance of scale of operations along with stable operating margins while efficiently managing working capital leading to lower reliance on bank line will remain a key monitorable. |
Liquidity: Adequate Expected cash accrual of Rs 80-100 crore per annum over the medium term will comfortably cover yearly debt obligation of Rs 11-15 crore. Cash and equivalent stood at Rs 81 crore as on March 31, 2022. Consolidated fund-based limit of Rs 102 crore was utilized 70% on average over the 12 months through March 2022. Internal accrual, cash and equivalent and unutilized bank lines will be sufficient to meet debt obligation and incremental working capital requirement. |
Outlook: Stable CRISIL Ratings believes the Poct group will continue to benefit from established market position and strong relationships with key customers and suppliers. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Group Set up in 2008 as a partnership firm by Mr. Saurabh Garg and Ms. Amita Garg, PS is based in Lucknow, Uttar Pradesh. The firm trades reagents, diagnostic machines, and medical equipment, such as pathology equipment, consumables, and reagent diagnostic kits. It also offers laboratory services to government hospitals and medical colleges.
QLBPL manufactures reagents and trades medical equipment. It sells its products through 150 distributors.
HMPL manufactures and trades critical care equipment and cardiology products. |
Key Financial Indicators (Standalone)
Key financial indicators (Combined)
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
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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This Annexure has been updated on 05-Aug-2022 in line with the lender-wise facility details as on 05-Aug-2022 received from the rated entity.
Criteria Details
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