| Raminfo Limited | ||||||
| 'CRISIL BB+/Stable/CRISIL A4+' 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 BB+/Stable/CRISIL A4+' ratings on to the bank facilities of Raminfo Limited (RL)
The ratings reflect established track record of RL in the e-governance information technology (IT) services market, diversified business risk profile and comfortable financial risk profile. These strengths are partially offset by modest scale of operations amid intense competition and working capital intensive operation. |
Key Rating Drivers & Detailed Description Strengths:
RL, established in 1994, has been providing IT services to government agencies for over a decade, with special focus on e-governance. Established market position helped the company successfully implement its customised in-house software products. Longstanding presence of the promoter and the management team, the company’s established track record of operations, and strong customer relationships should continue to benefit the business risk profile.
The company changed its business model in fiscal 2018, and now only focuses on providing value-added services, while smaller project-related work is outsourced to other companies. This allows the company to maintain a more stable margin as it has greater focus on milestones being achieved while sustaining a fixed timeline for each project. The company has been working on expanding its sector exposure and has bagged new orders from energy, healthcare and agricultural logistics sector during fiscal 2021, resulting in diversified and increased revenue for fiscal 2022. The margin is expected to improve going forward, supported by new projects from energy, healthcare and agricultural logistics sectors.
Networth is estimated to remain healthy around was Rs 23 crores as on March 31, 2022 and will continue to increase over the medium term backed by steady accretion to reserves. In addition, capital structure is comfortable with estimated gearing of below 0.5 times and total outside liabilities to tangible networth ratio of about 2.2 times in fiscal 2022 as compared to 0.09 time and 2.39 times, respectively, a year ago. Debt protection metrics are strong, with estimated interest coverage and net cash accrual to total debt ratios of above 20 times and above 3 times, respectively, in fiscal 2022. Financial risk profile is expected to remain comfortable over the medium term supported by steady growth in revenues and improving profitability.
Weaknesses:
Significant investments made by the central and state governments, in the e-governance sector, should provide strong impetus, and continue to offer opportunities for IT companies such as RL. However, the company faces stiff competition from several small and mid-sized players. Moreover, with the tender-based nature of operations and high price competitiveness, scale may remain average over the medium term. Revenues are estimated to increase to about Rs 100 to 105 crores in fiscal 2022, from Rs 77.5 crores in fiscal 2021 supported by new order wins.
Operations are working capital intensive, as reflected in sizeable gross current assets (GCAs) of 236 days, as on March 31, 2021, led by receivables of around 126 days which is estimated to remain around 225 days and 125 days, respectively, in fiscal 2022. This is because of the revenue comes from government organizations where the realization gets stretched. CRISIL ratings believes that the working capital management of the company is expected to remain high over the medium term. |
Liquidity: Adequate Liquidity is adequate backed by expected cash accrual of Rs 5.0-6.0 crore each in fiscals 2022 and 2023 should comfortably cover annual debt obligation of Rs 0.15 crore and Rs 0.18 crore, respectively. Fund-based limit of Rs 4 crore was utilized at 10% on average over the 12 months through November 2021. Cash and equivalent stood at Rs 21 crore as on March 31, 2021. Current ratio is moderate at 1.29 time as on March 31, 2021. |
Outlook: Stable CRISIL Ratings believes RL will continue to benefit from its established market position and comfortable financial risk profile over the medium term. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company RL, incorporated in 1994, is based in Hyderabad. It provides IT-enabled services/ software development with focus on e-governance in administration, utilities, IT-enabled citizen/consumer services and banking services. The company has entered into energy and healthcare business in fiscal 2021 and is further expanding into agricultural logistics. The company is managed by Mr. L. Srinath Reddy and Mr. V. Anil Kumar Ambati. It is listed on Bombay Stock Exchange. |
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 - 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 25-Apr-22 in line with the lender-wise facility details as on 22-Apr-22 received from the rated entity.
Criteria Details
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