Rating Rationale
December 03, 2024 | Mumbai
Udayshivakumar Infra Limited
Ratings reaffirmed at 'CRISIL BBB/Stable/CRISIL A3+'; Rated amount enhanced for Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.267.55 Crore (Enhanced from Rs.195 Crore)
Long Term RatingCRISIL BBB/Stable (Reaffirmed)
Short Term RatingCRISIL A3+ (Reaffirmed)
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 reaffirmed its ‘CRISIL BBB/Stable/CRISIL A3+’ ratings on the bank facilities of Udayshivakumar Infra Ltd (UIL).

 

The ratings continue to reflect UIL's long track record of operations and the extensive experience of its promoter, healthy orderbook providing revenue visibility and comfortable financial risk profile. These strengths are partially offset by susceptibility to tender-based and working capital intensive operations.

Analytical Approach:

CRISIL Ratings has evaluated the standalone business and financial risk profiles of UIL.

Key Rating Drivers & Detailed Description

Strengths:

  • Long track record of operations and extensive experience of the promoter: Since its inception, UIL has successfully completed various infrastructure projects from different government departments and agencies. The promoter Mr Udayshivakumar has over 20 years of experience in the civil construction sector. This has given him an in-depth understanding of the market dynamics and enabled him to establish healthy relationships with suppliers and customers.

 

  • Healthy orderbook providing revenue visibility: Outstanding orders of Rs 1598 crore as on October 31, 2024, are to be executed over the next 12-24 months. The healthy orderbook provides significant revenue visibility over the medium term.

 

  • Comfortable financial risk profile: Low reliance on external funds yielded a gearing of 0.22 time and low total outside liabilities to adjusted tangible networth (TOL/ANW) of 0.84 time as on March 31, 2024. Debt protection measures have also been healthy due to leverage and moderate profitability. The interest coverage and net cash accrual to total debt (NCATD) ratios were 7.84 times and 0.96 time, respectively, for fiscal 2024. Debt protection measures are expected to remain at similar level over the medium term.

 

Weaknesses:

  • Susceptibility to tender-based operations: Revenue and profitability entirely depend on the ability to win tenders. Also, entities in this segment face intense competition, thus requiring to bid aggressively to get contracts, which restricts the operating margin to a moderate level. Also, given the cyclicality inherent in the construction industry, the ability to maintain profitability margin through operating efficiency becomes critical.

 

  • Working capital intensive operations: Gross current assets were sizeable at more than 100 days over the three fiscals ended March 31, 2024 driven by high debtor and inventory levels. It is required to extend long credit period. Furthermore, due to business need, it holds large work-in-process and inventory.

Liquidity: Adequate

Expected cash accrual of over Rs 18 crore should comfortably cover term debt obligation of Rs 8-10 crore over the medium term.Bank limit utilisation averaged a moderate 63% over the 12 months ended October 2024.

Outlook: Stable

CRISIL Ratings believes UIL will continue to benefit from the extensive experience of its promoter, and established relationships with clients.

Rating sensitivity factors

Upward factors

  • Increase in revenue by 30-40% and sustenance of operating margin over 10%, leading to higher cash accrual
  • Improvement in the working capital cycle
  • Sustenance of financial risk profile

 

Downward factors

  • Decline in profitability below 7% due to higher raw material costs or change in revenue mix.
  • Large debt-funded capital expenditure weakens capital structure
  • Substantial increase in working capital requirements thus weakening the liquidity and financial risk profiles

About the Company

UIL was initially formed as a sole proprietorship under the name of M/s Udayshivakumar at Davangere, Karnataka in August 2002 and was converted into a partnership firm under the name of M/s. Udayshivakumar in 2014. Later, it was converted into a private limited company with the name Udayshivakumar Infra Pvt Ltd in 2019. Subsequently, the company was converted into a public limited company in August 2022 with the current name. UIL is engaged in the business of civil construction works such as construction of roads and bridges, canal works and irrigation works for state government, central government and government civic bodies and corporations. Additionally, it is engaged in manufacturing ready-mix concrete (RMC). UIL is listed on both the National Stock Exchange and Bombay Stock Exchange and is promoted by Mr Udayshivakumar Rajanna.

Key Financial Indicators

As on / for the period ended March 31

 

2024

2023

Operating income

Rs crore

577.28

286.96

Reported profit after tax (PAT)

Rs crore

30.08

15.84

PAT margin

%

5.23

5.56

Adjusted debt/Adjusted networth

Times

0.22

0.31

Interest coverage

Times

7.84

7.13

Status of non cooperation with previous CRA:

UIL has not cooperated with Brickwork Ratings India Pvt Ltd, which has classified it as non-cooperative through release dated February 06, 2023. The reason provided by Brickwork Ratings India Pvt Ltd is non-furnishing of information for monitoring of ratings.

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 Bank Guarantee NA NA NA 186.00 NA CRISIL A3+
NA Cash Credit NA NA NA 50.00 NA CRISIL BBB/Stable
NA Term Loan NA NA 31-Mar-28 31.55 NA CRISIL BBB/Stable
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 81.55 CRISIL BBB/Stable   -- 12-10-23 CRISIL BBB/Stable   --   -- --
      --   -- 29-09-23 CRISIL BBB/Stable   --   -- --
Non-Fund Based Facilities ST 186.0 CRISIL A3+   -- 12-10-23 CRISIL A3+   --   -- --
      --   -- 29-09-23 CRISIL A3+   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 165 State Bank of India CRISIL A3+
Bank Guarantee 21 HDFC Bank Limited CRISIL A3+
Cash Credit 30 State Bank of India CRISIL BBB/Stable
Cash Credit 20 HDFC Bank Limited CRISIL BBB/Stable
Term Loan 31.55 HDFC Bank Limited CRISIL BBB/Stable
Criteria Details
Links to related criteria
Rating criteria for manufaturing and service sector companies
CRISILs Approach to Financial Ratios
Rating Criteria for Construction Industry

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