Rating Rationale
February 10, 2025 | Mumbai
Vasa Denticity Limited
'Crisil BBB/Stable' assigned to Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.15 Crore
Long Term RatingCrisil BBB/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 BBB/Stable’ rating to the long-term bank facilities of Vasa Denticity Ltd (VDL; part of VDL group).

 

The rating reflects VDL's established distribution network, in-house IT infrastructure (infra) in the e-commerce space, wide product portfolio coupled with the extensive industry experience of the promoters, improvement in operational metrics leading to better operating margin, and healthy financial risk profile. These strengths are partially offset by the growing yet moderate scale of operations and exposure to intense competition.

Analytical approach

Crisil Ratings has consolidated the business and financial profiles of VDL and its wholly owned subsidiary Waldent Innovations Pvt Ltd, referred to as VDL group.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key rating drivers and detailed description

Strengths:

  • Established distribution network and wide product portfolio: The VDL group operates both online and offline, housing approximately 300 domestic and international brands with a comprehensive range of more than 20,000 dental products. The online channel is operated through its website Dentalkart.com and mobile application Dentalkart. It provides one – stop solution to dental professionals, private clinics, hospitals, medical colleges for their product needs. These along-with the decade-long experience of the promoters in the dental industry, their strong understanding of market dynamics, and established relationships with diverse suppliers and customers, and multi-brand products will continue to support the business.

 

  • Improvement in operational metrics leading to better operating margin: Currently, the group operates through five warehouses across India, located in Haryana, Delhi, Mumbai, Bengaluru, Kolkata, Guwahati. As a result of continuous addition of warehouses, average delivery time has reduced from 6.2 days in fiscal 2022 to 4.5 days in the first half of fiscal 2025. This improvement has supported acquisition of new customers and retention of existing ones. The group will be increasing the warehouse capacity, which will enable it to reduce the average delivery time further and add customers. The contribution from own product portfolio has been consistently increasing from 46% in fiscal 2022 to ~50% in fiscal 2024, resulting in an improvement in the operating margin from 7.4% in fiscal 2022 to 11.4% in fiscal 2024.

 

  • Healthy financial risk profile: Networth was healthy at Rs 66.6 crore as on March 31, 2024. VDL has raised Rs 85 crore via private placement against equity dilution of ~8%. Networth is expected to improve to around Rs 132 crore as on March 31, 2025, and further to around Rs 190 crore as on March 31, 2026, supported by equity infusion and above average accretion to reserve. The group’s capital structure has been healthy due to negligible long-term debt yielding low total outside liabilities to adjusted networth (TOL/ANW) ratio expected around 0.15 time as on March 31, 2025 (0.25 time a year earlier). Debt protection measures have also been comfortable due to leverage and moderate profitability. The interest coverage ratio was 209 times for fiscal 2024 and expected to remain above average going ahead.

 

Weaknesses:

  • Growing but moderate scale of operations: Revenue has recorded a compound annual growth rate of more than 62% over the three fiscals ended March 31, 2024, driven by the increasing number of stock-keeping units (SKUs), healthy order inflow and wide customer base. Revenue stood at Rs 171.88 crore in fiscal 2024, with the e-commerce segment contributing around 92% and rest from offline channels. Average revenue per order and customer has been growing consistently over the years. Nevertheless, sustained growth in scale is a key monitorable as the company has achieved revenue of Rs 111.88 crore in the first half of fiscal 2025 and is expected to clock around Rs 240 – 245 crore for the full fiscal with 60% contribution during the second half.

 

  • Exposure to intense competition: The group faces competition from domestic and global e-commerce portals, direct sellers/manufacturers and other unorganised players. Accordingly, it provides periodic discounts and attractive schemes to stave-off competition and retain customers. Aggressive expansion by existing competitors and emergence of large players may impinge upon the profitability and scalability of the group and will remain a key monitorable.

Liquidity: Adequate

Expected annual net cash accrual of Rs 20 - 25 crore will be more than adequate against yearly term debt obligation of Rs 0.08 – 1.2 crore over the medium term. In addition, it will act as cushion to the liquidity. Current ratio was healthy at 5.07 times as on March 31, 2024. Liquidity is also supported by free fixed deposit receipts of around Rs 42.35 crore as on December 31, 2024. Low gearing and strong networth support the financial flexibility and provide the financial cushion in case of any adverse conditions or downturn in the business.

Outlook: Stable

Crisil Ratings believes the VDL group will continue to benefit from its established distribution network and wide product portfolio in the e-commerce space.

Rating sensitivity factors

Upward factors

  • Increase in revenue by 30% and sustenance of operating margin at 10-11%, leading to higher net cash accrual
  • Sustenance of financial risk profile

 

Downward factors

  • Operating margin declining to 6-7%, hence leading to lower net cash accrual
  • A substantial increase in the working capital requirements or any large debt funded capital expenditure, thus weakening the liquidity and financial risk profiles.

About the company

VDL, formerly known as Vasa Denticity Pvt Ltd, was incorporated in 2016. VDL is engaged in the business of marketing and distribution of a comprehensive portfolio of dental products including consumables, instruments, equipment, and accessories for diagnosing, treating and preventing dental conditions as well as improving the aesthetics of the human smile through its online portal Dentalkart.com and mobile application Dentalkart. VDL operates an online channel housing approximately 300 domestic and international brands with a comprehensive product range of more than 20,000 dental products. VDL is promoted by Dr Vikas Agarwal and Mr Sandeep Aggarwal.

Key financial indicators

As on / for the period ended March 31

 

2024

2023

Operating income

Rs crore

171.94

123.33

Reported profit after tax (PAT)

Rs crore

15.08

7.60

PAT margin

%

8.77

6.16

Adjusted debt/Adjusted networth

Times

0.00

0.07

Interest coverage

Times

208.70

27.07

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 15.00 NA Crisil BBB/Stable

Annexure – List of entities consolidated

Names of entities consolidated

Extent of consolidation

Rationale for consolidation

Waldent Innovations Pvt Ltd

100%

Subsidiary

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 15.0 Crisil BBB/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 15 Not Applicable Crisil BBB/Stable
Criteria Details
Links to related criteria
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for consolidation

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