| GPT Infraprojects Limited | ||||||
| 'CRISIL BBB+ / Stable / CRISIL A2 ' assigned to Bank Debt | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed rationale CRISIL Ratings has assigned its ‘CRISIL BBB+/Stable/CRISIL A2’ ratings to the bank facilities of GPT Infraprojects Ltd (GPT; part of the GPT group).
The ratings reflect the extensive experience of the promoter in the civil construction business, and the strong project execution capabilities, healthy order pipeline and above-average financial risk profile of the company. These strengths are partially offset by the exposure to risks arising from the tender-based nature of business. |
Analytical approach For arriving at its ratings, CRISIL Ratings has combined the business and financial risk profiles of GPT and its subsidiaries, GPT Investments Pvt Ltd, GPT Concrete Products South Africa (Pty) Ltd, Jogbani Highway Pvt Ltd and associate, GPT TransNamib Concrete Sleepers (Pty) Limited (together referred to as the GPT group), as these all entities are under a common management and engaged in the same business and have significant 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: Extensive experience of the promoter and strong project execution capabilities: Benefits from the four decade-long experience of the promoter, his strong understanding of local market dynamics and healthy relationships with customers and suppliers should continue to support the business. Strong track record and project execution capabilities across Eastern India have helped the company bag orders and have a healthy order book position of Rs 1,845 crore as on 23 March 2022.
Healthy order book position: Large pipeline of unexecuted orders worth nearly Rs 1,845 crore (which is about 3.03 times the revenue of fiscal 2021) provides steady revenue visibility. The average execution cycle lies in the range of 2-3 years depending on the size of the project.
Above-average financial risk profile: Financial risk profile is marked by a sizeable networth and moderate gearing of around Rs 237 crore and 1.11 times, respectively, as on March 31, 2021. Improved accretion to reserve and profitability should help networth improve further. Interest coverage and net cash accrual to adjusted debt ratios were comfortable at 2.19 times and 0.13 time, respectively, for fiscal 2021.
Weaknesses: Working capital-intensive operations: Gross current assets (GCAs) were high at 284 days as on March 31 2022, given the inherent nature of the civil construction business. The company has higher unbilled revenue as the business model entails construction of bridges with longer execution periods and billing is done on milestone basis only after approval by respective authorities.
Exposure to intense competition and risks inherent in tender-based operations: Revenue and profitability depend on the ability to win tenders. Intense competition prompts players to bid aggressively so as to bag contracts, and thus restricts the operating margin to a moderate level. Amidst the inherent cyclicality, sustaining the operating margin through operating efficiency becomes critical. Uncertified work done on the project remains unbilled, as billing is done on milestone basis after certification of a portion of work done as per the tender terms. |
Liquidity: Adequate Liquidity remains adequate marked by sufficient cash accrual and moderately high bank limit utilisation. Expected cash accrual of Rs 35-40 crore per fiscal will comfortably cover the term debt of Rs 9-10 crore in the medium term. Bank limit utilisation averaged 88% for the 12 months ended December 31, 2021. Current ratio was also healthy at 1.66 times as on March 31, 2021. |
Outlook: Stable CRISIL Ratings believes GPT will continue to benefit from its established market position in the construction business. |
Rating sensitivity factors Upward factors: • Better working capital management leading to improvement in GCAs days around 230 days • Improvement in debt protection metrics especially the interest coverage more than 3 times
Downward factors: • Decline in scale or margin leading to cash accrual below Rs 10 crore • Any debt-funded capital expenditure or stretch in working capital cycle weakening the financial risk profile |
About the Company GPTIL is the flagship company of the GPT Group, which undertakes civil infrastructure projects and manufactures concrete sleepers and iron castings for segments such as railways and healthcare. GPTIL has been promoted by Mr Dwarika Prasad Tantia, the chairman and Mr Shree Gopal Tantia, the managing director. Mr Atul Tantia and Mr Vaibhav Tantia (sons of Mr DP Tantia) are the chief financial officer and chief operating officer, respectively. |
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)
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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 31-Mar-2022 in line with the lender-wise facility details as on 31-Mar-2022 received from the rated entity.
Criteria Details
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