| Established track record of operations with experienced management
Sumit Group, founded and managed by Mr. Mitaram R. Jangid, is a well-established group with experience spanning almost four decades in real estate development projects and has delivered more than 5 million sq. ft. and has completed more than 60 projects. Currently, the group is engaged in the development of three residential projects namely Sumit KMR Param, Sumit Bhaktisudha and Sumit Star Exclusif and has recently completed two projects, Sumit Gurukrishna and Sumit Bells Plot A. Moreover, the promoters have demonstrated good execution capabilities with a reputation for quality and timely completion in the past.
Moderate funding risk for ongoing projects
The funding risk for ongoing projects remains moderate as the group has already completed debt tie-up for the ongoing projects and even the repayment has begun owing to the presence of cash sweep model. Further, funds from promoters have also been infused in a timely manner supported by the issuance of shares and warrants amounting to Rs. 72.97 Cr. in FY25. However, going forward, the group plans to finance the upcoming projects through the combination of mix of external debt (~30 percent), customer advances and promoters’ infusions, timely tie up and infusion of which remains a key rating monitorable.
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| Project execution risk
The construction for the project Sumit KMR Param commenced in June 2024 and is at moderate stage of construction (achieved 33.25 percent till Dec 2025), completion timelines by March 2029. The project Star Exclusif is also at moderate stage of construction and has completed ~53 percent of the total project cost and is expected to be completed by June 2027. The other ongoing project Bhaktisudha is at nascent stage of construction with ~15 percent cost incurred till Dec 2025 and is expected to be completed by June 2028. Further till December 2025, for KMR Param project, ~43 percent units have been sold, out of which ~38 percent is realised; for Star Exclusif project, ~16 percent units have been sold, out of which ~45 percent is realised and no units have been sold under the project Bhaktisudha.
Therefore, considering the completion timelines of all these projects is 1.5-3 years from now, projects are at moderate to nascent stages now, implementation risks exist. Further, majority funds infusions are expected from customer advances, therefore, timely realisation of the same remains a key rating monitorable.
However, the risk is mitigated to an extent as the group has established track record of completion of projects in a timely manner.
Susceptibility to cyclicality inherent in the Indian real estate industry
The real estate segment in India is cyclical and affected by volatile prices and opaque transactions. Further, the real estate industry in India is highly fragmented, with most developers having a city-specific or region-specific presence. The risks associated with the industry are cyclical in nature and directly linked to fluctuations in property prices and interest rates, which could affect the sales velocity and the operations of the project. Moreover, the industry is also exposed to certain regulatory policies and regulations which directly impacts the demand and operating growth of real estate players. Hence, business risk profile of the group will remain susceptible to risks arising from any industry slowdown.
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