Rating Rationale
June 30, 2025 | Mumbai
V.L. Infraprojects Limited
'Crisil BBB-/Stable/Crisil A3' assigned to Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.60 Crore
Long Term RatingCrisil BBB-/Stable (Assigned)
Short Term RatingCrisil A3 (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 BBB-/Stable/Crisil A3 ratings to the bank loan facilities of V.L. Infraprojects Limited (VLIL).

 

The ratings reflect the extensive industry experience of VLIL's promoter in the construction industry, the company’s healthy orderbook providing revenue visibility, moderate working capital cycle and comfortable financial risk profile. These strengths are partially offset by susceptibility to tender-based operations, geographical concentration risk in revenue profile and customer concentration in revenue profile.

Analytical Approach:
Crisil Ratings has evaluated the standalone business and financial risk profiles of VLIL.

Key Rating Drivers & Detailed Description

Strengths:

  • Extensive industry experience of the promoter and healthy orderbook: The key promoter, Rajagopal Reddy Annam Reddy, has more than two decades of experience in the construction industry. This has given him an understanding of the market dynamics and enabled him to establish relationships with suppliers and customers. The company has orderbook of Rs 220 crore as of June 2025, which is to be executed over the next 12-24 months. Its healthy orderbook provides significant revenue visibility over the medium term.

 

  • Moderate working capital cycle: Gross current assets (GCAs) were at 155-220 days over the three fiscals through 2025. Its moderate working capital management is reflected in GCAs of 212 days as on March 31, 2025. It is required to extend long credit period in line with the industry standards as the customers are small and medium-size players who require credit. Furthermore, to meet its business requirement, it hold large work in progress inventory.

 

  • Healthy financial risk profile: The capital structure was healthy owing to low reliance on external funds yielding gearing of 0.48 time and total outside liabilities to adjusted networth ratio of 0.92 time as on March 31, 2025. Debt protection metrics were also comfortable owing to leverage and healthy profitability. The interest coverage and net cash accrual to total debt ratios were at 3.93 times and 0.45 time, respectively, in fiscal 2025. These are expected to remain at a similar level over the medium term.

 

Weaknesses:

  • Susceptibility to tender-based operations: Revenue and profitability entirely depend on the ability to win tenders. Also, entities in this segment face intense competition and require to bid aggressively to get contracts, which restricts the operating margin to a modest level. Also, given the cyclicality inherent in the construction industry, the ability to maintain the operating profitability through operating efficiency becomes critical.

 

  • Geographical concentration risk in revenue profile: VLIL has high geographic concentration in its revenue profile. The company derives 50-60% of its revenue from Gujarat. Thus, any slowdown in the economy may adversely affect financial and business performance.

Liquidity: Adequate

Bank limit utilisation was low around 65% on average for the 12 months ended March 31, 2025. Annual cash accrual is expected at Rs 7-8.5 crore against yearly term debt obligation of Rs 2 crore over the medium term and will cushion liquidity.

 

The current ratio was healthy at 1.95 times as on March31, 2025.

Outlook: Stable

Crisil Ratings believes VLIL will continue to benefit from the extensive experience of its promoter and established relationships with clients.

Rating sensitivity factors

Upward factors:

  • Increase in revenue by 20% and sustenance of operating margin, leading to high cash accrual
  • Improvement in the working capital cycle with GCAs below 180 days.
     

Downward factors:

  • Decline in net cash accrual below Rs 6 crore on account of decrease in revenue or operating profit
  • Large debt-funded capital expenditure, weakening the capital structure
  • Increase in working capital requirement, weakening liquidity and financial risk profile

About the Company

VLIL was incorporated in 2014 as VLIL. It was converted into public limited company in September 2023. VLIL provides designing, construction and commissioning of various types of government projects, especially in water infrastructure and irrigation segments. It is involved in executing water supply and sewerage infrastructure projects, including the procurement and installation of pipes, construction of civil works, and installation of electro-mechanical equipment, as well as providing operations and maintenance services for water distribution pipelines.

 

The company got listed on the Emerge platform of NSE SME on July 30, 2024.

 

VLIL is managed by Rajagopal Reddy Annam Reddy, Mydhili Rajagopal Reddy and Nageswara Rao Repuri.

Key Financial Indicators

As on / for the period ended March 31

Unit

2025

2024

Operating income

Rs crore

121.03

113.93

Reported profit after tax (PAT)

Rs crore

6.70

6.11

PAT margin

%

5.54

5.36

Adjusted debt/adjusted networth

Times

0.48

0.87

Interest coverage

Times

3.93

5.55

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 Bank Guarantee NA NA NA 18.40 NA Crisil A3
NA Letter of Credit NA NA NA 19.20 NA Crisil A3
NA Proposed Long Term Bank Loan Facility NA NA NA 22.06 NA Crisil BBB-/Stable
NA Working Capital Term Loan NA NA 31-Mar-26 0.34 NA Crisil BBB-/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 22.4 Crisil BBB-/Stable   --   --   --   -- --
Non-Fund Based Facilities ST 37.6 Crisil A3   --   --   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 18.4 HDFC Bank Limited Crisil A3
Letter of Credit 14.6 HDFC Bank Limited Crisil A3
Letter of Credit 4.6 HDFC Bank Limited Crisil A3
Proposed Long Term Bank Loan Facility 22.06 Not Applicable Crisil BBB-/Stable
Working Capital Term Loan 0.34 HDFC Bank Limited Crisil BBB-/Stable
Criteria Details
Links to related criteria
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)

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