Rating Rationale
March 31, 2025 | Mumbai
Saridena Constructions Private Limited
'Crisil B+/Stable' assigned to Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.95 Crore
Long Term RatingCrisil B+/Stable (Assigned)
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 assigned its Crisil B+/Stable rating to the long-term bank facilities of Saridena Constructions Private Limited (SCPL).

 

The ratings reflect SCPL's susceptibility to cyclicality inherent in the Indian real estate industry and exposure to project-related risks. These weaknesses are offset by prime location of the ongoing project.

Analytical Approach

Crisil Ratings has evaluated the standalone business and financial risk profiles of SCPL.

Key Rating Drivers & Detailed Description

Weaknesses:

  • Susceptibility to cyclicality inherent in the Indian real estate industry: The real estate sector in India is cyclical and affected by volatile prices, opaque transactions, and a highly fragmented market structure. The risk is compounded by aggressive timelines for completion, with shortage of manpower (project engineers and skilled labour). Also, the recent slowdown in the sector has adversely delayed the execution and saleability of several ongoing projects. Revenue and operating margin are susceptible to cyclicality in the sector, too. Hence, business risk profile will remain susceptible to risks arising from any industry slowdown.

 

  • Exposure to project-related risks: SCPL faces moderate project-related risks as a substantial portion (80%) of the construction is yet to be completed. Operating performance will remain susceptible to timely completion of the project and flow of customer advances, which shall remain key rating sensitivity factors over the medium term.

 

Strength:

  • Prime location of the ongoing project: SCPL’s current project LakeWoods is strategically located in Gandipet, Hyderabad, which is well-connected to major parts of Hyderabad including the airport, railway station and major highways. The profitable location of the project ensures healthy demand and, hence, steady revenue flow.

Liquidity: Stretched

Liquidity is moderate for funding the construction of ongoing as well as upcoming projects through a mix of customer advances, unsecured loans, and bank loans. Although the cash flows from the project is expected to remain sufficient to meet the term debt obligations, any unforeseen delay in project construction might result in cost overrun, thereby affecting repayments of term debt. Further any delay in receipt of advances from customers is also expected to impact on the firm’s liquidity in a significant way.

Outlook: Stable

Crisil Ratings believes SCPL will continue to benefit from the extensive experience of the promoters.

Rating sensitivity factors

Upward factors

  • Increase in pace of booking in ongoing project leading to improvement in cash DSCR to more than 1.25 times.
  • Early completion of the project and higher customer advances result in substantial cash flow from operations.

 

Downward factors

  • Lower than expected cash flow from operations because of subdued response to, or delay in completion of, projects there by leading to average DSCR of less than 1.1 times.
  • Time and cost over run in the ongoing residential projects leading to execution risks.

About the Company

SCPL is Hyderabad-based residential real estate developer incorporated in 2006. The is developing a residential villa project named LakeWoods in Gandipet, Hyderabad. The project is expected to be completed in November 2026.

 

SCPL is owned & managed by Mr.Saridena Suman rao, Mr. Saridena Anand Rao and Ms. Subhadra Devi Saridena.

Key Financial Indicators

As on / for the period ended March 31

 

2024

2023

Operating income

Rs crore

2.10

12.73

Reported profit after tax

Rs crore

-1.33

4.27

PAT margins

%

-65.00

33.51

Adjusted Debt/Adjusted Net worth

Times

10.53

3.73

Interest coverage

Times

-13.87

234.49

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 and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. 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 Outstanding with Outlook
NA Proposed Long Term Bank Loan Facility NA NA NA 95.00 NA Crisil B+/Stable
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 95.0 Crisil B+/Stable   --   --   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Proposed Long Term Bank Loan Facility 95 Not Applicable Crisil B+/Stable
Criteria Details
Links to related criteria
Criteria for Real estate developers, LRD and CMBS (including approach for financial ratios)
Basics of Ratings (including default recognition, assessing information adequacy)

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