Rating Rationale
February 25, 2025 | Mumbai
Dentcare Dental Lab Private Limited
Rating upgraded to 'Crisil BBB/Stable'
 
Rating Action
Total Bank Loan Facilities RatedRs.35 Crore
Long Term RatingCrisil BBB/Stable (Upgraded from 'Crisil BBB-/Stable')
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 upgraded its rating on the long-term bank facilities of Dentcare Dental Lab Pvt Ltd (DDLPL; part of the Dentcare group) to ‘Crisil BBB/Stable’ from ‘Crisil BBB-/Stable’.

 

The upgrade reflects improvement in the business risk profile of the company, backed by sustained growth in scale while maintaining stable profitability. Revenue of the group grew at compound annual growth rate (CAGR) of over 20% in the three fiscals through 2024 to Rs 225 crore in fiscal 2024 from Rs 129 crore in fiscal 2022 and is further expected to grow 10-12% in fiscal 2025, supported by volume growth of 10-12% with price hike of 7% and higher geographical diversification. Operating margin improved to 20.27% in fiscal 2024 from 16.66% in fiscal 2023 and is expected to remain at a similar level over the medium term. This has led to an increase in net cash accrual to Rs 30.12 crore from Rs 19.62 crore in the previous fiscal and it remains sufficient for debt servicing. Sustained improvement in revenue, while maintaining stable operating margin, will support the overall credit profile of the group.

 

The financial profile continues to be strong with steady accretion to reserves and moderate capital structure. In the absence of debt-funded capital expenditure (capex), the TOL/TNW is expected to improve and sustain below 2 times with interest coverage ratio over 7 times supported by healthy operating margin. However, huge capital withdrawals or further investments in subsidiaries / group companies may affect the current ratio and will remain a key monitorable.

 

The rating continues to reflect the extensive industry experience of the promoters of DDLPL and its healthy debt protection metrics. These strengths are partially offset by geographical concentration in revenue, susceptibility to intense competition and moderately leveraged capital structure.

Analytical approach

Crisil Ratings has combined the business and financial risk profiles of DDLPL and Dentcare Dental Lab (DDL). This is because both these entities have common promoters and financial and operational linkages.

 

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:

  • Extensive industry experience of the promoters: The chief promoter, Mr John Kuriakose—also the Managing Director—has over 25 years of experience in providing dental prostheses. The extensive experience of the promoters has helped in establishing long-term relationships with key customers, resulting in healthy revenue growth of Rs 225.52 crore on-year in fiscal 2024.
     
  • Healthy debt protection metrics: The group’s debt protection metrics have also been comfortable despite moderately leveraged capital structure. The interest coverage and net cash accrual to total debt (NCATD) ratios were 7.77 times and 0.45 time, respectively, for fiscal 2024. Debt protection metrics are expected to remain at similar level, over the medium term, despite capex planned in the next two years.

 

Weaknesses:

  • Geographical concentration, susceptibility to intense competition: DDLPL is a major player in the organised sector of dental prosthetics, but faces intense competition from local players in the market including both organised and unorganised segments. Geographical concentration is high as more than 60% of the group’s revenue is generated from southern India.

 

  • Moderately leveraged capital structure: The group’s capital structure has been moderate due to significant reliance on external funds yielding gearing of 1.33 times and total outside liabilities to adjusted networth (TOLANW) ratio of 2.06 times as on March 31, 2024. The group will undertake capex of around Rs 20 crore over the next two years. The capex will be funded through internal accrual and unsecured loans from the promoters. Thus, the capital structure is expected to remain at a similar level due to debt-funded capex.

Liquidity: Adequate

Bank limit utilisation was high at 90% on average for the 12 months ended December 31, 2024. Cash accrual are expected to be over Rs 30 crore which will be sufficient against term debt obligation of Rs 12-13 over the medium term. Investment in group companies, including overseas associates from USA, New Zealand, UK, Australia in the form of equity, loans and advances increased to Rs 7.84 crore in fiscal 2024 from Rs 5.45 crore in fiscal 2023. Further exposure to group companies, weakening liquidity and financial risk profiles, including current ratio,  will remain a rating sensitivity factor.

 

The current ratio was low at 0.88 time as on March 31, 2024.

Outlook: Stable

Crisil Ratings believes the group will continue to benefit from the extensive experience of its promoters, and established relationships with clients.

Rating sensitivity factors

Upward factors:

  • Significant increase in the scale of operations and sustenance of operating margin at over 20% leading to higher cash accrual
  • Improvement in the liquidity risk profile with lower bank limit utilisation
  • Improvement in the financial risk profile.
     

Downward factors:

  • Decline in scale of operations by 20% and profitability margin below 13%, leading to lower net cash accrual
  • Capital withdrawal or further investments in subsidiaries or group companies, weakening liquidity and financial risk profiles

About the company

DDLPL, incorporated in 2007, is engaged in the design, development, fabrication and marketing of dental prostheses. It mainly manufactures dental fittings and dental implants. Its facility in Ernakulam Kerala has a laboratory spread across 225,000 square feet and employs 4,200 skilled technicians.

 

In 2019, DDLPL acquired the business of DDL through a slump sale agreement. At present, DDLPL looks after the entire dental business while DDL receives only rental and service income from DDLPL.

 

The group is owned and managed by Mr John Kuriakose along with his brothers - Mr Baby Kuriakose and Mr Saju Kuriakose.

Key financial indicators

Combined

 

 

 

As on / for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

225.52

185.71

Reported profit after tax (PAT)

Rs crore

45.72

30.94

PAT margin

%

24.48

15.12

Adjusted debt/adjusted networth

Times

1.33

1.98

Interest coverage

Times

7.77

5.06

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 Cash Credit NA NA NA 13.50 NA Crisil BBB/Stable
NA Drop Line Overdraft Facility NA NA NA 4.28 NA Crisil BBB/Stable
NA Proposed Working Capital Facility NA NA NA 2.99 NA Crisil BBB/Stable
NA Long Term Loan NA NA 31-Dec-27 6.56 NA Crisil BBB/Stable
NA Working Capital Term Loan NA NA 31-Mar-28 7.67 NA Crisil BBB/Stable

Annexure – List of entities consolidated

Names of Entities Consolidated

Extent of Consolidation

Rationale for Consolidation

Dentcare Dental Lab Pvt Ltd

Full

Managed centrally with operational and financial linkages

Dentcare Dental Lab

Full

Managed centrally with operational and financial linkages
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 35.0 Crisil BBB/Stable   -- 01-03-24 Crisil BBB-/Stable 30-11-23 Crisil BBB-/Stable 27-07-22 Crisil B /Stable(Issuer Not Cooperating)* Crisil B /Stable(Issuer Not Cooperating)*
      --   --   -- 26-10-23 Withdrawn (Issuer Not Cooperating)*   -- --
      --   --   -- 25-09-23 Crisil B /Stable(Issuer Not Cooperating)*   -- --
All amounts are in Rs.Cr.
* - Issuer did not cooperate; based on best-available information
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit 9.5 Axis Bank Limited Crisil BBB/Stable
Cash Credit 4 ICICI Bank Limited Crisil BBB/Stable
Drop Line Overdraft Facility 4.28 ICICI Bank Limited Crisil BBB/Stable
Long Term Loan 6.56 Axis Bank Limited Crisil BBB/Stable
Proposed Working Capital Facility 2.99 Not Applicable Crisil BBB/Stable
Working Capital Term Loan 7.67 ICICI Bank Limited 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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