Rating Rationale
October 06, 2023 | Mumbai
Wardwizard Innovations & Mobility Limited
'CRISIL BBB / Stable' assigned to Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.60 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 Wardwizard Innovations & Mobility Limited (WIML).

 

The rating reflects the extensive experience of its promoters in leadership position in the domestic low speed (LS) E2W market and comfortable financial risk profile. These strengths are partially offset by moderate scale of revenue, though improving and working capital intensive operations.

Key Rating Drivers & Detailed Description

Strengths:

  • Leadership position in the domestic low speed (LS) E2W market

WIML is the one of largest player in the low speed E2W market in India, backed by experience of its promoters, well-established ‘Joy’ brand in this space as well as a pan-India distribution network. Company has network of over 750 dealers and over 25 owned showrooms. Subsequently, company was able to register healthy y-o-y growth both in terms of revenue and sells of vehicle. As per market trend, sales of high speed vehicle expecting to grow twice the growth of LS, subsequently, company shifting its focus on HS vehicle and expecting to support the topline of company over the medium term.

 

  • Comfortable financial risk profile

The company had a comfortable networth of Rs 83.46 crore with gearing of 0.17 times as on March 31, 2023. The debt protection metrics were also comfortable, with interest coverage and net cash accrual to adjusted debt ratios of 19 times and 0.96 time, respectively, in fiscal 2023.

 

Weakness:

  • Though improving but moderate scale of operations

Company reported revenue of Rs 239 crore in FY23 against Rs 185 crore in FY22 reflecting y-o-y growth of 29% backed by healthy demand from low speed E2W and subsequent improved capacity utilisation. During Q1FY24, company reported revenue of Rs 39 crore. With company’s cautious effort towards shifting of focus towards high speed E2W, the revenue contribution from HS increased from 15-20% in FY23 to 80% in Q1FY24 and expecting to support future growth. The ability of company to achieve envisage revenue will be key monitorable.

 

  • Working-capital intensive operations

Operations of company were working capital intensive with gross current assets of 214 days in FY23 and are largely dominated by inventory of 114 days and supported by controlled receivables of 25-30 days. Nevertheless, portion of its working capital requirement is being funded through creditors of 90-120 days. Considering nature of industry, the operations are expecting to be working capital intensive over the medium term.

Liquidity: Adequate

Liquidity is adequate as company expecting generation of healthy net cash accruals against term debt obligation. Bank lines are utilized in range of 60-70% for past six months ended July 2023.

Outlook: Stable

CRISIL rating believes WIML will derive benefit from its promoters' extensive experience and their steady funding support and comfortable financial risk profile.

Rating Sensitivity factors

Upward factors

  • Sizable growth in revenue with operating margin of over 10%
  • Sustained financial risk profile

 

Downward factors

  • Decline in accruals by 30%
  • Debt-funded capex weakening the capital structure

About the Company

WIML is manufactures and sells high speed and low speed electric two-wheeler and electric rickshaw three-wheeler. Company has state-of-the-art manufacturing unit in Vadodara, with total installed capacity of 120,000 unit per year on single shift basis.

Key Financial Indicators

Particulars

Unit

2023

2022

Revenue

Rs crore

239.01

184.56

Profit after tax (PAT)

Rs crore

9.44

8.48

PAT margin

%

3.95

4.59

Adjusted debt/adjusted networth

Times

0.17

0.00

Interest coverage

Times

19.19

2896.32

 

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 level

Rating assigned and outlook

NA

Cash credit

NA

NA

NA

15

NA

CRISIL BBB/Stable

NA

Term loan

NA

NA

June 2028

45

NA

CRISIL BBB/Stable

 

Annexure - Rating History for last 3 Years
  Current 2023 (History) 2022  2021  2020  Start of 2020
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 60.0 CRISIL BBB/Stable   --   --   --   -- --
All amounts are in Rs.Cr.
 
 
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit 15 HDFC Bank Limited CRISIL BBB/Stable
Term Loan 45 HDFC Bank Limited CRISIL BBB/Stable
Criteria Details
Links to related criteria
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings - process, scale and default recognition
CRISILs Approach to Financial Ratios
Understanding CRISILs Ratings and Rating Scales

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