| Modest Scale of operations:
The revenue of the company declines and stood at Rs.218.65 Cr. in FY2025 against Rs.285.58 Cr. in FY2024 mainly due to slowdown arising from overall unfavourable market conditions. The company makes ~90-95 percent of its income from the sale of cars and the rest through sale of spares and services. The operating margin of company improved and stood at 3.72 percent in FY2025 against 3.11 percent in FY2024. This is on account of decrease in the overall operating expenses incurred during the year. Further, the profitability margin also reduced to 0.06 percent in FY2025 against 0.16 percent in FY2024.
Acuité believes, that the ability of the company to improve revenue and profitability will remain a key rating sensitivity.
Average financial risk profile:
The financial risk profile of the company stood average marked by low networth, high gearing and average debt protection metrics. The net worth of the company stood at Rs. 14.38 Cr. as on March 31st, 2025, as against Rs. 14.32 Cr. as on March 31st, 2024, due to accretion of profit to reserve. The gearing (debt-equity) of the company stood at 4.72 times as on March 31, 2025, as compared to 6.19 times as on March 31, 2024. The total debt of the company stood at Rs. 67.83 Cr. as on March 31, 2025, as against Rs. 88.65 Cr. as on March 31, 2024. Further, the debt protection metrics of the company stood average reflected by debt service coverage ratio of 0.72 times for FY2025 as against 0.94 times for FY2024 and interest coverage ratio stood at 1.19 times for FY2025 as against 1.24 times for FY2024. The net cash accruals to total debt (NCA/TD) stood at 0.02 times in FY2025 as compared to 0.02 times in the previous year.
Moderate Working capital operations:
The company’s working capital operations are moderate in nature. The GCA days stood range bound to 102 days as on March 31, 2025, as against 105 days as on March 31, 2024. The GCA days are driven by debtor days and inventory days. The debtor days stood at 41 days as on March 31,2025 as against 45 days as on March 31, 2024. The average credit period allowed to customer is 40-50 days. The inventory days stood at 38 days as on March 31, 2025, as against 34 days as on March 31, 2024. Around 70 percent of the inventory is sold within 60 days. The creditor days stood at 1 day as on March 31,2025 as against 1 day as on March 31, 2024. The payment terms with TATA motors ltd is fully advance. Further, the working capital limit utilisation stood moderate at 65.69% for the last 6 months ending December 2025.
Highly competitive industry with price controlled by OEMs:
The companies in this dealership industry have limited operating and profitability margins as prices are controlled majorly by OEMs, depending on the volumes sold by the dealers. The fate of the companies in the industry is extremely dependent on the performance of the OEMs and their market share in the industry. The Automobile industry is very much cyclical in nature and faces a stiff competition from rivals on pricing and features. Any increases in prices by the OEMs can affect the business performance of the dealers. AAPL currently operates only in a few cities. So, going forward AAPL needs to increase the dealership reach in other cities to increase realizations for the company. Further, the company faces a stiff competition from the other dealers of same OEM and any other OEMs.
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