| Shriprop Structures Private Limited | ||||
| Rating reaffirmed at 'CRISIL A-/Stable' | ||||
| 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’ rating on the long-term bank facility of Shriprop Structures Pvt Ltd (SSPL; a subsidiary of Shriram Properties Ltd [SPL; rated ‘CRISIL A-/Stable’]).
The rating continues to reflect benefits the company derives from the strong business, financial and managerial support of its parent, SPL. The parent is also committed to ensuring timely servicing of the company’s debt, for which it has provided a corporate guarantee.
SSPL is developing a residential project, Shriram Shankari, in Guduvancheri (Tamil Nadu), spread across 2.50 million square feet (msf), of which 2.31 msf was launched in four phases and 0.2 msf will launched as Phase 5 in the current fiscal. Phases 1 and 2, launched in 2010 with a total saleable area of 1.32 msf, are fully sold, completed and delivered. Phases 3 and 4 were launched in July 2019 and as of December 2021, 97% and 42%, respectively, were sold, and 98% and 56%, respectively, of construction completed. SSPL had launched phase 5, with a saleable area of 0.2 msf, in 2018 as a senior living project. However, due to muted demand, it discontinued this phase and will be relaunching it as a mid-income housing project in tandem with the previous phases, by December 2024.
The strong brand and established position of SPL in the Chennai residential real estate market are likely to support project saleability further.
These strengths are partially offset by exposure to risks related to the mid-construction stage of Phase 4 and planned launch of phase 5, and susceptibility to cyclicality inherent in the real estate sector.
Committed receivables of Rs 48 crore as of December 2023 and collection from future sales will be sufficient to cover the remaining construction cost of the launched phases. That said, SPL will infuse equity in case of any cash flow mismatch owing to lower realisation over the medium term.
The extensive experience and financial strength of the parent is driven by its established brand in the real estate industry in Bengaluru, Chennai and Kolkata; along with comfortable cash flow and financial flexibility. Sales and actual collections for the first nine months of fiscal 2024 were strong, at Rs 1,654 crore and Rs 1,055 crore, respectively (Rs 1,352 crore and Rs 1,090 crore, respectively, for the corresponding period previous fiscal). SPL launched projects aggregating 2.23 msf in the first nine months of fiscal 2024, and will likely launch 0.9 msf in the last quarter of the fiscal. Realisation per square feet improved 15% on-year for the first nine months of fiscal 2024. Timely launches and sustained demand are monitorable.
The financial risk profile of the parent is supported by steady operating cash flow. With healthy saleability across projects and improving collections, dependence on debt reduced substantially to Rs 508 crore as of December 2023 vis-à-vis Rs 644 crore in fiscal 2023. The ratio of debt to total assets is expected to sustain below 20% over the medium term. Capital structure is comfortable, with consolidated gearing below 0.50 time as on December 31, 2023. |
Analytical Approach CRISIL Ratings has notched up the standalone rating of SSPL based on expectation of strong support from the parent, both on an ongoing basis and in case of distress. This is in line with the CRISIL Ratings criteria for notching up standalone ratings of companies based on parent support. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
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Liquidity: Adequate Committed receivables of Rs 48 crore as on December 31, 2023, will support 72% of the balance execution of the launched phases (3&4). Liquidity is also backed by expected need-based financial assistance from the parent. |
Outlook: Stable The company will continue to benefit from the extensive experience and financial and managerial support of its parent, and favourable location of the project in Chennai. |
Rating Sensitivity factors Upward factors:
Downward factors:
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About the Company SSPL is a special-purpose vehicle floated by SPL to develop the Shriram Shankari project, a 33-acre township in Guduvancheri with lakeside residencies. |
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)
&Dropline OD sublimit of Rs.20.0 crore |
| 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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