| SJS Healthcare Limited | ||||||
| Ratings downgraded to 'Crisil BBB-/Stable/Crisil A3' | ||||||
| Rating Action | ||||||
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| 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 downgraded its ratings on the bank facilities of SJS Healthcare Limited (SJS) to ‘Crisil BBB-/Stable/Crisil A3’ from ‘Crisil BBB/Stable/Crisil A3+’.
The downgrade in ratings reflects moderation in the business risk profile of SJS driven by a fall in revenue in the visa test segment that contributes 30-40% to total revenue with higher margin compared to other revenue segments. Resultantly, overall revenue was Rs 118 crore till December 2024 and is expected to be Rs 160-165 crore for the full fiscal, down from ~Rs 205 crore reported during fiscal 2024. Additionally, the operating margin is also expected to moderate to 13-14%, which has historically remained at 25-30%, thus significantly impacting the net cash accruals. Net cash accrual is expected to be Rs 20-22 crore in fiscal 2026 compared to Rs 40-45 crore during fiscal 2023 and 2024 each. Because of reduced net cash accruals, the company’s dependence on bank lines has also increased, an evinced by bank limit utilisation increasing to 75% on average in the 12 months through January 2025, as against 18% during previous fiscal. While the operations are expected to ramp up during fiscal 2026, amidst expected revival in via test segment and improvement in non-visa segment, it will continue to remain lower than Crisil’s earlier expectations.
The rating continues to factor in the company’s comfortable financial risk profile. Adjusted networth is expected to be Rs 200-210 crore and gearing below 1 time as of Mar 31, 2025. Debt protection indicators, though expected to moderate in the ongoing fiscal amidst business de-growth, will continue to remain comfortable. Interest coverage and net cash accrual to adjusted debt ratio as estimated at ~4 times and ~0.2 times, respectively, for fiscal 2025, down from 11 times and 0.6 times, respectively during previous fiscal. Further, Crisil rating also notes that the SJS has extended corporate guarantee to the tune of Rs 121 crore to its group companies. Going forward, any further increase in the corporate guarantee and/or advances to group companies (Namdhari Agro Fresh Private Limited, Namdhari Seeds Private Limited & Dairy Tales Namdhari Private Limited) could have a further impact on the financial risk profile and thus will remain a key monitorable.
The ratings reflect the established regional market position of SJS in the healthcare industry and its comfortable financial risk profile. These strengths are partially offset by the modest scale of operations amidst intense competition and sizeable investments in a group entity. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profiles of SJS. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
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Liquidity: Adequate Amidst reduction in net cash accruals due to business de-growth, the company’s dependence on bank lines increased to 75% on average for the 12 months through January 2025, as against 18% during previous fiscals. The available cushion in bank lines will aid the incremental working capital requirement over the medium term, however, any further moderation in business performance impacting the liquidity will remain a key monitorable. Cash accrual is expected to be Rs 15-17 crore during fiscal 2025, which shall improve to 20-22 crore over the medium term, and will be sufficient against annual term debt obligation of Rs 11-12 crore. The current ratio weakened to 0.3 times as of Mar 31, 2024 (0.7 times during previous fiscal period) and shall continue to remain low at 0.4-0.5 time over the medium term. |
Outlook: Stable Crisil Ratings believes SJS will continue to benefit from its established market position in the healthcare industry in Ludhiana, Punjab, and its healthy financial risk profile. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company Set up in 1999 by Satguru Uday Singh (current guru of Namdhari Sikhs), SJS runs a multi-specialty hospital, SPS Hospitals in Ludhiana, Punjab. The hospital provides tertiary healthcare services in cardiology, neurology and gynaecology. |
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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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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Criteria Details
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