| Udayshivakumar Infra Limited | ||||||
| 'CRISIL BBB/Stable/CRISIL A3+' assigned to Bank Debt | ||||||
| Rating Action | ||||||
| ||||||
| 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 assigned its 'CRISIL BBB/Stable/CRISIL A3+' ratings to the bank facilities of Udayshivakumar Infra Limited (UIL).
The ratings reflects UIL's long track record of operations and extensive experience of the promoters, healthy order book providing revenue visibility, comfortable financial risk profile and sound operating efficiencies. These strengths are partially offset by its susceptibility to tender-based operations and working capital intensive operations. |
Key Rating Drivers & Detailed Description Strengths: Long track record of operations and extensive experience of the promoters: Since its inception, UIL has successfully completed various infra 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 understanding of the market dynamics and enabled him to establish relationships with suppliers and customers.
Healthy order book providing revenue visibility: The company has order book of Rs 503 crore as on May 2023, which is to be executed over next 12-24 months. Its healthy order book provides significant revenue visibility over medium term.
Comfortable financial risk profile: UIL’s capital structure have been at healthy level due to lower reliance on external funds yielding gearing of 0.31 times and low total outside liabilities to adj tangible networth (TOL/ANW) of 0.97 times for year ending on 31st March 2023. UIL’s debt protection measures have also been at healthy level due to leverage and healthy profitability. The interest coverage and net cash accrual to total debt (NCATD) ratio are at 7.29 times and 0.49 times for fiscal 2023. UIL’s debt protection measures are expected to remain at similar level over medium term.
Sound operating efficiencies: UIL has healthy operating efficiencies, marked by healthy return on capital employed (RoCE). Driven by high economies of scale and experienced management.
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 at 162.8-210.8 days over the three fiscals ended March 31, 2023. Its intensive working capital management is reflected in its gross current assets (GCA) of 210.8 days as on March 31, 2023. Its large working capital requirements arise from its high debtor and inventory levels. It is required to extend long credit period. Furthermore, due to its business need, it holds large work in process & inventory. |
Liquidity- Adequate Bank limit utilisation is moderate at around 80.27 percent for the past twelve months ended July 2023. Cash accrual are expected to be over Rs 20-22 crore which are sufficient against term debt obligation of Rs 6.0-9.8 crore over the medium term. Current ratio was healthy at 1.8 times on March 31, 2023. Healthy cash and bank balance of around Rs crore as on March 31, 2023. Low gearing and moderate net worth support its financial flexibility, and provides the financial cushion available in case of any adverse conditions or downturn in the business |
Outlook: Stable CRISIL Ratings believe UIL will continue to benefit from the extensive experience of its promoter, and established relationships with clients. |
Rating Sensitivity factors Upward factors
Downward factors
|
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 Private Limited in 2019. Subsequently, the company was converted into a public limited company in August 2022, and its name was changed to Udayshivakumar Infra Limited. UIL is engaged in business of civil construction works such as construction of roads and bridges, canal works, irrigation works, etc. for State Government, Central Government and Government Civic Bodies and Corporations. Additionally, it is engaged in manufacturing of ready-mix concrete (RMC). UIL is listed on both National Stock Exchange and Bombay Stock Exchange.UIL is promoted by Mr. Udayshivakumar Rajanna. |
Key Financial Indicators
|
Status of non cooperation with previous CRA: UIL has not cooperated with Brickwork Ratings India Private Limited which has classified it as non-cooperative vide release dated February 06, 2023. The reason provided by Brickwork Ratings India Private Limited is non-furnishing of information for monitoring of ratings. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||
|
Criteria Details
|