Rating Rationale
August 04, 2022 | Mumbai
Pravara Institute of Medical Sciences
'CCR BBB/Stable' assigned to Corporate Credit Rating
 
Rating Action
Corporate Credit RatingCCR BBB/Stable (Assigned)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has assigned its 'CCR BBB/Stable' corporate credit rating to Pravara Institute Of Medical Sciences (PIMS).

 

The rating reflects the trust’s strong regional position in medical institution, healthy occupancy levels and comfortable financial risk profile. These strengths are partially offset by susceptibility to stringent regulations and intense competition from government medical colleges.

Key Rating Drivers & Detailed Description

Strengths:

Strong regional position: PIMS manages six institutions in the medical field and has been accredited by the National Assessment and Accreditation Council (NAAC) with an ‘A’ grade. The institute enjoys a strong reputation in Loni, Maharashtra. It attracts students not only in and around Loni but also students from foreign nationals and provides education to more than 6,000 students across all its institutions.

 

Healthy occupancy of colleges: The PIMS has reported high overall occupancy levels in all departments for the last three years, reflecting the healthy demand for the medical college. Further have a strong regional presence and high demand for medical college, occupancy is expected to remain high over the medium term.

 

Comfortable financial risk profile: The comfortable financial risk profile is supported by healthy accretion to reserve. Limited reliance on outside borrowings has led to a strong capital structure, as reflected in estimated networth of Rs 110-120 crores as on March 31, 2022. In the absence of any major debt obligation over the medium term, the financial risk profile is expected to remain healthy.

 

Weakness:

Risks related to regulatory changes: Establishment and operations of medical colleges are regulated by National Medical Council and Indian Nursing Council. Both the bodies have detailed procedures for granting permission to set up institutions, and approvals need to be renewed periodically. Also, the trust needs to regularly invest in its workforce and infrastructure. Any non-compliance will result in the cancellation of affiliation and license, leading to loss of reputation for the college and revenue for the trust.

 

Exposure to competition from government medical colleges: Demand for government colleges is high because they charge lower fees. Private colleges have benefitted from the gap between demand and availability. Addition of government colleges, where fees are substantially lower, could pull students away from private colleges.

Liquidity: Adequate

PIMS has adequate liquidity driven by expected cash accruals of Rs.16-17 crores annually in fiscal 2023 and fiscal 2024 no repayment obligation. Cash and cash equivalents were Rs.70-72 crores as on March 31, 2022. CRISIL Ratings expects internal accruals, cash & cash equivalents and unutilized bank lines to be sufficient to meet its repayment obligations and incremental working capital requirements.

Outlook: Stable

CRISIL Ratings believes PIMS’s business risk profile will remain stable over the medium term.

Rating Sensitivity Factors

Upward factors

  • Improvement in occupancy levels leading to net cash accrual of more than Rs 20 crore
  • Sustenance of a comfortable financial risk profile

 

Downward factors

  • Lower-than-expected fees collection resulting in sharp decline in revenue leading to decline in- net cash accruals
  • Any large, debt-funded capital expenditure leading to total outside liabilities to Adjusted networth ratio of above 1 time

About the Trust

PIMS (NAAC “A” Grade), established in September 2003, operates six educational institutions in Loni, offering courses in medicine, pharmacy, nursing, dental, biotech and social medicine. The trust is led by Dr. Rajendra Vikhe Patil.

Key Financial Indicators

As on/for the period ended March 31

Unit

2021

2020

Operating income

Rs.Crore

170.37

144.32

Reported profit after tax (PAT)

Rs.Crore

28.46

7.49

PAT margin

%

16.71

2.17

Adjusted debt/adjusted networth

Times

-

0.11

Interest coverage

Times

194.58

29.66

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)

ISIN

Name of instrument

Date of allotment

Coupon

rate (%)

Maturity date

Issue

size

(Rs.Crore)

Complexity levels

Rating assigned with outlook

NA

NA

NA

NA

NA

NA

NA

NA

Annexure - Rating History for last 3 Years
  Current 2022 (History) 2021  2020  2019  Start of 2019
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Corporate Credit Rating LT 0.0 CCR BBB/Stable   --   --   --   -- --
All amounts are in Rs.Cr.

  

Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings - process, scale and default recognition
CRISILs criteria for rating Education institutions

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