| Yash Technologies Private Limited | ||||||
| Ratings reaffirmed at 'CRISIL A / Stable / CRISIL A1 ' | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL A/Stable/CRISIL A1’ ratings on the bank facilities of Yash Technologies Pvt Ltd (YTPL).
YTPL’s business risk profile will continue to benefit from healthy deal pipeline from the parent, Yash Technologies Inc., USA (YTI) and increase in customer base. The company’s revenue grew by 6% in fiscal 2021 driven by the strong performance of subsidiaries. Profitability improved materially by 240 basis points in fiscal 2021 to 15.2% due to higher employee utilization and reduction in overheads majorly travel and administrative expenses.
Over the near to medium-term, revenues are expected to grow by 15% given increasing demand for digitization across industries and company’s initiatives to garner newer clients. Operating margins are expected to remain range bound at around 13-14%; while employee expenses will increase in line with the increase in business volumes, the same will be nearly offset by sustenance of some of the cost saving measures and continued increase in employee utilization as well as billing rates.
The ratings continue to reflect YTPL’s healthy business risk profile marked by presence in multiple verticals and healthy clientele, supported by experienced management. Financial risk profile, supported by a comfortable capital structure and healthy debt protection metrics. Liquidity is further supported by healthy cash surplus of Rs 215 crore as on March 31,2021; in the absence of modest capex plans and repatriation of funds to parent, liquidity will remain healthy over the medium term. These strengths are partially offset by geographic concentration in revenue |
Analytical Approach For arriving at the ratings, CRISIL Ratings has combined the business and financial risk profiles of YTPL and its subsidiaries and joint ventures. This is because the entities, collectively referred to as the YTPL group, have significant operational and financial linkages.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Presence in multiple verticals and healthy clientele, supported by experienced management: YTPL provides application development, maintenance, testing, and digital services. Over the past five years, it has entered several IT service segments, including life sciences, chemicals, food processing, oil and gas, healthcare, banking and insurance, and logistics and transport, through acquisitions. Along with the parent, Yash Technologies Inc (YTI), YTPL caters to the information technology (IT) requirements of over 350 large and mid-sized companies across six continents. Some of these clients feature in the Fortune 500 list of companies globally.
Adequate financial risk profile: Capital structure should remain healthy, with peak gearing expected at 0.20 time over the medium term, despite the capex done previously. Improving cash accrual and moderate debt should keep debt protection metrics adequate over the medium term. Interest coverage and net cash accrual to total debt ratios are estimated at 21.65 time and 1.24 time in fiscal 2022 as against 13.92 times and 1.27 time, respectively, in fiscal 2021.
Weaknesses Geographic and customer concentration in revenue: The bulk of revenue is derived from USA (59%) and India (33%) in fiscal 2021. Contribution from these countries has remained high over the last three fiscals. Also, nearly 60% of sales are to the parent, which outsources contracts to YTPL. However, the company is actively adding clients in different geographies to reduce revenue concentration risk.
Exposure to forex rate volatility: Majority of revenue is earned in foreign currency which, in the absence of a formal hedging policy, exposes the company to any sharp fluctuation in forex rates |
Liquidity: Adequate YTPL is likely to generate Rs 120 crore cash accruals annually over the next three years. Company also had average unutilised bank lines of Rs 40 crore and cash and marketable securities of Rs 215 crore as on March 31, 2021. Hence, it has adequate liquidity for its term debt obligation of Rs 22 crore in fiscal 2022 and fiscal 2023, and additional working capital requirement. |
Outlook Stable CRISIL Ratings believes YTPL will maintain its business and financial risk profiles over the medium term, supported by steady growth in revenue, healthy networth, and moderate debt. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Incorporated in Indore in December 2002 and promoted by Mr Manoj Kumar Baheti and Mr Kirti Kumar Baheti, YTPL is a wholly owned subsidiary of YTI and provides software development services and IT-enabled services. It also trades in software. Its registered office is in Indore, while the global headquarters are in East Moline, Illinois (the US). The company has over 30 campuses across India, Malaysia, Singapore, Dubai, Brazil, Europe, and the US. It has over 4,500 global employees and was recently awarded the SEI-CMMI, Level 5 certification. |
About the Parent YTI, which holds the entire stake in YTPL, was incorporated in 1996 in USA by Mr Manoj Kumar Baheti. It offers strategic consulting services, such as business process modernisation, change management, and application management services. YTI is headquartered in East Moline, too, and has offices across Asia, North America, South America, Australia, and Europe. Revenue for CY2020 was USD 305.8 million while profit was USD 24.8 million. |
Key Financial Indicators
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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. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
*Fully fungible with Bank Guarantee |
Annexure – List of entities consolidated
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| 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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This Annexure has been updated on 22-Mar-2022 in line with the lender-wise facility details as on 13-Dec-2021 received from the rated entity.
Criteria Details
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