| Robust Hotels Limited | ||||||
| Ratings Reaffirmed | ||||||
| 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 BB/Stable/CRISIL A4+’ ratings on the bank facilities of Robust Hotels Limited (RHL; Formerly known as Robust Hotels Private Limited ).
The rating continues to reflect the extensive experience of the promoters and established brand presence and healthy occupancy levels and ARR. The rating also factors in a comfortable net worth and capital structure. These strengths are partially offset by weak debt protection metrics and susceptibility to cyclicality and revival of demand amid the pandemic.
''Post communication of ratings, we have received an Appeal request along with additional information from the client. We acknowledged the request and continue to evaluate the appeal. This rating rationale is being published in line with regulatory timelines. CRISIL Ratings shall publish a separate rating rationale to communicate any change in rating / outlook post completion of appeal''. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoters and established brand presence: The company's promoters have more than three and half decades of experience in managing hotel operations association with Hyatt brand, which bring along its existing clientele (both domestic and international). Increase in foreign and NRI clients is expected to augur well for average room rate (ARR) on account of differential tari Hyatt's large network and global marketing strategies. The brand denotes luxury and a high quality of com critical differentiating factors in the premium hotel segment. The occupancy levels have been better than the pre-covid levels in fiscal 2023 and is expected to improve over the medium term.
Comfortable net worth and capital structure: The financial risk profile is supported by healthy net worth of around Rs.506.60 crore in FY23 against networth of Rs.304.60 crore in FY22. The same has led to comfortable TOL/TNW ratio and gearing of 0.19 and 0.22 times, respectively as on March 31, 2023. With no debt-funded capital expenditure (capex) plans over the medium term and steady accretion to reserve and scheduled term loan repayments, gearing and capital structure is expected to improve further over the medium term.
Healthy occupancy levels and ARR: Occupancy and average room rent (ARR) for the fiscal 2023 was at 77% to 85% and Rs 5700 to 6500 respectively, as compared to 70% and Rs 5400, respectively, pre-pandemic (for fiscal 2020). Renovation of the hotel rooms will further support the hotel to improve their ARR which will lead to improvement in revenue as well as the operation margins.
Weakness: Moderate protection metrics: RHL's interest coverage and net cash accruals to total debt (NCATD) ratio stood at 1.9 times and 0.65 times as on 31st March 2023.
Revenue concentration and susceptibility to economic downturns: Entire revenue comes from its hotel in Chennai. Dependence on a single location exposes the company to any adverse change in demand-supply situation and event risk. Moreover, the hospitality industry is susceptible to downturns in domestic and international economies. During weaker periods, revenue per available room for premium and mid-segment hotels get more acutely affected than economy hotels. However, RHL has acquisition plans which mitigates the risk. |
Liquidity: Adequate Cash accrual is estimated at Rs. 15 to 30 crore for the next 3 fiscals, against yearly repayment obligation of Rs 23 to 39 crore in the near term; However repayments are expected to be supported by the accrual available and the surplus cash of Rs.21.33 crores and liquid investments of Rs.68.01 crore as on date which will aid financial flexibility. Bank lines were utilized at a modest 46% on average during the 12 months through April 2023. |
Outlook: Stable CRISIL Ratings believes that RHL shall benefit from its established market position and from the financial flexibility of its promoters. |
Rating Sensitivity Factors Upward Factors:
Downward Factors:
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About the Company Incorporated in 2007 and promoted by Mr Radhe Shyam Saraf and his family members, RHL operates a five-star hotel property under the brand Hyatt Regency in Chennai. The hotel has 325 rooms, including 28 suits, and is equipped with swimming pool, fitness centre, business centre, banquet hall, salon and restaurants. RHPL was a wholly owned subsidiary of Asian Hotels (East) Ltd and currently its demerged and listed their shares. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||
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Criteria Details
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