Rating Rationale
August 06, 2024 | Mumbai
Ajmera Realty & Infra India Limited
'CRISIL A-/Stable' assigned to Bank Debt and Corporate Credit Rating
 
Rating Action
Total Bank Loan Facilities RatedRs.500 Crore
Long Term RatingCRISIL A-/Stable (Assigned)
 
Corporate Credit RatingCRISIL A-/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 A-/Stable’ rating to the long-term bank facilities and corporate credit rating of Ajmera Realty & Infra India Limited (ARIIL).

 

The rating reflects ARIIL’s established track record of over five decades and strong brand and market position in Mumbai’s real estate market, extensive industry experience of the promoters, adequate booking, advances and construction progress of ongoing projects. These strengths are partially offset by moderately high level of debt, and susceptibility to cyclicality in the real estate sector.

Analytical Approach

CRISIL Ratings has consolidated the business and financial risk profiles of ARIIL and its subsidiaries, joint ventures and associates, which are strategically important to, and have a significant degree of operational integration with ARIIL.

 

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:

Established track record and established market position in Mumbai: 

Ajmera group, has a presence of over five decades in real estate market and is known for large developments, quality construction and good saleability. As of March 2024, the group has developed and delivered over 202 lakh sq ft, mostly in the residential segment, and has around 11.85 lakh sq. ft of projects under construction, majorly in Mumbai. The group has a land bank of around ~111 lakh sq.ft in mumbai, which will support growth in future. Due to its established presence in the real estate industry in Mumbai and track record of timely delivery of projects, it has established a strong brand in the market. The projects have a suffix of ‘Ajmera’ which helps in strong brand recall. his has helped the company build strong relations with customers, leading to major revenues coming from existing clients and references from them.

 

Extensive experience of promoters: The group also benefits from its promoter’s and management team’s vast experience of over 5 decades in real estate industry. The promoters of the company have long established presence in Mumbai and have good local knowledge of the market. The promoters follow a hands-on approach in management and is well versed in all areas of business such as designing, finance, and marketing, ably supported by a team of professionals.

 

Adequate booking, advances and construction progress of ongoing projects:

Presently, the group has eight ongoing projects of around 11.85 lakh sq ft of developer’s share of saleable area, with total project cost of around Rs. 1900 crores. Out of the total project, five are more than 60% complete and overall completion progress of around 51%. Further, strong collection driven by healthy sales momentum leads to adequate cash flows to fund the construction. Out of the total saleable area, around 67% is already sold till March 2024. In line with the construction progress, the group has received 38% advances of the sold value cumulatively from all ongoing projects, with more than 50% advances in five projects. The committed receivables from already sold inventory will cover 100% of the construction cost and over the medium term, indicating healthy cash flow position. Additionally, the company has 8 upcoming projects for which development and approval process has started.

 

Weaknesses:

Moderately high level of debt

ARIIL has high leverage with debt of around 96% against construction cost for ongoing projects and sizeable debt for general corporate, despite healthy advances received. The high level of debt leads to significant repayment obligations. Debt to adj. cash flow from operations (adj. CFO) remains high at 3.97 times and adj. CFO to interest was moderate at 2.87 times for fiscal 2024. Further, debt for upcoming projects may add to additional pressure on the leverage.

 

Geographical concentration in the revenue profile

The Ajmera group’s operations are concentrated in the micro-market of Mumbai and Bangalore. This may impact revenue if there is any significant slowdown in demand or oversupply in the region and will be a key rating sensitivity factor.

 

Susceptibility to inherent risks in the real estate sector

The real estate sector in India is cyclical and affected by volatile prices, opaque transactions, and a highly fragmented market structure Also, its operations and margins remain susceptible to intense industry competition and economic cycles cyclicality in the industry. Any downfall in real estate industry, overall recession, inability of the company to maintain projected sales momentum, significant increase in project cost affecting the liquidity among other reasons may affect the implementation of the upcoming projects. Also, further increase in interest rate by banks may impact the demand for the real estate units over the medium term.

Liquidity: Strong

Ajmera group has strong liquidity market by healthy level of customer advances to be received from sold inventory. CRISIL expects realization of Rs. 650-800 crores in fiscal 2025 and 2026, sufficient to meet repayment obligations of Rs. 290-380 crores over the next two years. Balance construction cost to be incurred will be funded party by receivable from sold inventory and new bookings. The group has unsold inventory of around Rs 940 crore. Further the group has cash and cash balances of around Rs.115 crore as on March 31, 2024 Liquidity is supplemented by strong refinancing ability and strong saleability and collections in on-going projects.

Outlook: Stable

CRISIL Ratings believes the group will maintain its moderate business risk profile driven by healthy saleability of its projects.

Rating Sensitivity Factors

Upward factors

  • Timely completion of projects and higher customer advances result in substantial improvement in cash flow from operations.
  • Improvement of Debt to adj. cash flow from operations (adj. CFO) below 2 times with debt reduction

 

Downward factors

  • Higher than expected increase in debt levels resulting in debt to adj CFO of above 3 times.
  • Low cash flow from operations because of subdued response or lower than expected collection for ongoing and future projects.

About the Group

Incorporated in March 1985, ARIIL is flagship company of Ajmera Group. ARIIL is engaged in real estate developerment mainly in Mumbai and Bengaluru. The group has completed around 155 projects of total area of around 20.2 msf sq ft of developer’s share of saleable area. Currently, the operations are headed by Mr. Rajnikant S. Ajmera (Chairman), Mr. Manoj Ajmera (Managing Director) and Mr. Sanjay Chhotalal Ajmera (Whole-time Directors).

 

ARIIL is listed on Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE).

Key Financial Indicators

As on/for the period ended March 31

2024

2023

Operating income

Rs.Crore

702

432

Reported profit after tax (PAT)

Rs.Crore

104

72

PAT margin

%

14.80

16.58

Adjusted Gearing

Times

0.85

0.99

Adjusted Interest coverage ratio

Times

3.05

3.69

 

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

with outlook

NA

Term Loan

NA

NA

Jan-2028

500

NA

CRISIL A-/Stable

Annexure - List of Entities Consolidated

Names of Entities Consolidated

Extent of Consolidation

Rationale for Consolidation

Ajmera Realty and Infra India Limited

Full

Flagship company

Ajmera Estates Karnataka Pvt Ltd

Full

Wholly owned subsidiary

Shree Yogi Realcon Pvt Ltd

Full

Wholly owned subsidiary

Ajmera Corporation UK Ltd

Full

Wholly owned subsidiary

Jolly Brothers Pvt Ltd

Full

Wholly owned subsidiary

Ajmera Realcon Pvt Ltd

Full

Wholly owned subsidiary

Ajmera Realty Ventures Pvt Ltd

Full

Wholly owned subsidiary

Radha Raman Dev Ventures Pvt Ltd

Full

Wholly owned subsidiary

Ajmera Clean Green Energy Limited

Full

Wholly owned subsidiary

New Horizon Acres Pvt Ltd

Full

Wholly owned subsidiary

Ajmera Mayfair Global W.L.L

60%

subsidiary

Laudable Infrastructure LLP

70%

subsidiary

Sana Buildpro LLP

75%

subsidiary

Ajmera Infra Development LLP

70%

subsidiary

Anirdesh Developers Private Limited

85%

subsidiary

Sana Building Products LLP

75%

subsidiary

V.M. Procon Private Limited

50%

Associate

Ajmera Luxe Realty Pvt Ltd

50%

Joint Venture

Ajmera Housing Corporation Bangalore

70%

Step down subsidiary

Sumedha Spacelink LLP

50%

Subsidiary

Annexure - Rating History for last 3 Years
  Current 2024 (History) 2023  2022  2021  Start of 2021
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 500.0 CRISIL A-/Stable   --   --   --   -- --
Corporate Credit Rating LT 0.0 CRISIL A-/Stable   --   --   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Term Loan 250 Standard Chartered Bank Limited CRISIL A-/Stable
Term Loan 250 ICICI Bank Limited CRISIL A-/Stable
Criteria Details
Links to related criteria
CRISILs Bank Loan Ratings - process, scale and default recognition
CRISILs Rating criteria for Real Estate Developers
CRISILs Approach to Financial Ratios
CRISILs Criteria for Consolidation

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