Rating Rationale
June 28, 2019 | Mumbai
Trendset Builders Private Limited
Ratings Reaffirmed
 
Rating Action
Total Bank Loan Facilities Rated Rs.100 Crore
Long Term Rating CRISIL BB(SO)/Stable (Reaffirmed)
Long Term Rating CRISIL BB-/Stable (Reaffirmed)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has reaffirmed its 'CRISIL BB(SO)/Stable' rating to the lease rental discounting loan (LRD) and 'CRISIL BB-/Stable' ratings to the proposed long term bank facilities of Trendset Builders Private Limited (TBPL).
 
The ratings reflect the extensive experience of promoters and moderate financial risk profile. These strengths are partially offset by exposure to project related risks and susceptibility to risks and cyclicality inherent in the real estate industry.
 
The structured obligation (SO) has been assigned on the LRD loan as the rentals received from the counter parties are routed through the escrow account where the bank has first charge on these rentals.

Key Rating Drivers & Detailed Description
Strengths:
* Extensive experience of the promoters:

CRISIL believes that the extensive experience of the promoters will continue to support the business risk profile of the KBPL as promoters have 20 years of experience in executing both residential as well as commercial projects in various cities of Andhra Pradesh and Telangana, thus helping to forge healthy relationship with customers as well suppliers.

* Moderate financial risk profile:
TBPL's financial risk profile remains moderate and marked by moderate networth base and low reliance on external debt. Networth remains moderate around Rs. 31 Cr as on March 31, 2018 and expected to remain around Rs. 35 as on March 31, 2019. Majority of the projects are funded by promoters in the form of equity and unsecured loans. Therefore, reliance on external debt remains low.

Weaknesses:
* Project related risks:

TBPL faces moderate project related risks particularly implementation of the project as around 90 % of the construction is yet to be completed. Accordingly, flow of customer advances remain a key rating sensitivity factor over the medium term.

* Susceptibility to risks and cyclicality inherent in the real estate industry:
The real estate sector in India is cyclical because of sharp movements in prices and a highly fragmented market structure. With increase in supply, attractive prices offered by various builders, and constant regulatory changes, profitability of real estate players is expected to come under pressure over the medium term.
Liquidity

TBPL's liquidity profile is expected to remain comfortable with a debt service coverage ratio of 1.08 times to be maintained over the medium to meet the repayment of lease rental discounting loan.

Outlook: Stable

CRISIL believes that the TBPL will benefit over the medium term from extensive experience of the promoters and better market penetration in the real estate industry as the operations of the company increases. The outlook may be revised to 'Positive' in case of higher than bookings and receipt of customer advances vis-Ã'' -vis construction progress. Conversely, the outlook may be revised to in case of delay in construction of the project or lower than expected bookings which could affect the liquidity profile of the company.

About the Company

Trendset Builders Private Limited is a Private incorporated on 24 January 1997, is Hyderabad based real estate developer with more than 20 years of experience in developing residential as well as commercial projects. Till date the company has completed more than 20 residential and commercial projects in the state of Telangana.

Key Financial Indicators
Particulars Unit 2018 2017
Revenue Rs Cr 41.4 61.5
Profit after tax (PAT) Rs Cr 7.54 2.53
Profit after tax margin % 16.3 3.8
Adjusted debt/adjusted net worth Times 2.56 3.03
Interest coverage Times 1.63 1.83
 

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL 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)
ISIN Name of instrument Date of allotment Coupon
rate (%)
Maturity date Issue size
(Rs Cr)
Rating assigned with outlook
NA Lease rental discounting NA NA Jun-2017 20.0 CRISIL BB(SO)/Stable
NA Proposed Long term loan NA NA NA 80.0 CRISIL BB-/Stable
 
Annexure - Rating History for last 3 Years
  Current 2019 (History) 2018  2017  2016  Start of 2016
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund-based Bank Facilities  LT/ST  100.00  CRISIL BB(SO)/Stable/ CRISIL BB-/Stable      31-03-18  CRISIL BB(SO)/Stable/ CRISIL BB-/Stable    --    --  -- 
All amounts are in Rs.Cr.
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Lease Rental Discounting Loan 20 CRISIL BB(SO)/Stable Lease Rental Discounting Loan 20 CRISIL BB(SO)/Stable
Proposed Long Term Bank Loan Facility 80 CRISIL BB-/Stable Proposed Long Term Bank Loan Facility 80 CRISIL BB-/Stable
Total 100 -- Total 100 --
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
CRISILs Rating criteria for Real Estate Developers
Rating Criteria for Construction Industry
CRISILs Bank Loan Ratings

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