Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuité has assigned its long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) on Rs. 241.98 Cr. bank facilities of Deepak Builders and Developers (DBD). The outlook is 'Stable'.
Rationale for rating assigned
The rating assigned takes into account the established track record of operations of the firm supported by long standing experience of the promoters in the real estate industry. Further, it reflects moderate funding risk with timely infusion of funds by the promoters and adequate debt tie ups for the ongoing projects. It also factors the prudent management practices of debt prepayments and comfortable debt service coverage ratios over the debt tenure. However, the rating remains constrained by moderate implementation risks of ongoing projects, slow sales momentum with significant unsold inventory, timely sale and realisations of which shall remain a key rating monitorable. Further, the rating considers the significant geographical concentration risk, proprietorship nature of the firm, significant support extended to the group entities and inherent cyclicality in the real estate industry.
About the Company
Established in 1989, Deepak Builders and Developers (DBD) is engaged in the construction of residential and commercial real estate projects and is flagship entity of DBD group. The group has been engaged in the business of real estate development for more than three decades having its presence in Nashik and has developed more than 2.2 million sq. ft. of residential and commercial space. The firm is currently developing four commercial and residential projects of 1.09 million sq. ft. across Nashik. The firm operates as a sole proprietorship under the management of Mr. Deepak Chande.
Unsupported Rating
Not Applicable
Analytical Approach
Acuité has considered the standalone business and financial risk profile of Deepak Builders and Developers to arrive at the rating.
Key Rating Drivers
Strengths
Established track record of operations with experienced management
DBD Group is a Nashik based real estate developer promoted by Mr. Deepak Chande. The group brings more than three decades of experience and has delivered over 2.2 million sq. ft. across more than 30 projects in the commercial and residential segments. Moreover, the promoters have demonstrated good execution capabilities with a reputation for quality and timely completion in the past. Currently, the firm is engaged in development of four commercial and residential projects namely Star Plus B (3.02 lakh sq. ft. saleable area), Shree Kalika Plaza (2.33 lakh sq. ft. saleable area), Star World A (3.09 lakh sq. ft. saleable area) and Sunflower City Phase-I (2.50 lakh sq. ft. saleable area). Overall, the firm benefits from its well-established presence in Nashik’s growing real estate market, which is expected to enhance the saleability of its ongoing projects. Going forward, the upcoming projects of the group are expected to be undertaken in one of the group entities – Deepak Infra and Homes Private Limited.
Low funding risk for ongoing projects The funding risk for the ongoing projects stands low as the firm has secured debt tie-ups and the promoters have timely infused their contributions. Further, the ongoing projects are supported by the advances received against the sold units which are also utilised towards prepayment of the debt. The total budgeted cost for the ongoing four projects is Rs. 530.10 Cr. which is to be funded through ~10 percent of promoter contribution, approx. 40 percent through customer advances, and remaining 50 percent through external debt.
Weaknesses
Slow sales momentum
While two of the projects (Star Plus B and Shree Kalika Plaza) are almost completed and the other two Star World A and Sunflower City Phase I are at moderate stage with ~53 percent and ~88 percent of construction cost incurred respectively till December 2025, however, on a consolidated level, the firm has sold only 48 percent of the inventory till December 2025 (amounting to ~Rs. 375 Cr.) out of the total of 1418 units, reflecting highly unsold inventory. Moreover, the management anticipates ramping up of the sales velocity post receipt of the occupancy certificates, which shall remain a key rating monitorable. Therefore, the overall risk associated with the ongoing projects in the firm stands moderate due to low funding risk, moderate implementation risk and high demand side risk.
Geographical concentration risk and significant exposure to group companies
DBD’s business profile remains vulnerable to geographical concentration, with majority of its completed and ongoing projects located in and around Nashik, Maharashtra. Until the firm diversifies into other regions, this concentration exposes it to localized demand fluctuations and competitive pressures from established developers in the area. Furthermore, the firm continues to remain exposed to intense competition from the established real estate developers in Nashik. Moreover, DBD's constitution as a proprietorship firm is exposed to discrete risks, including the possibility of withdrawal of capital by the proprietor. This is reflected in the significant support extended to group entities (Deepak Infra and Homes Private Limited & Deepak Hotels Infra Private Limited) of ~108 percent of its net worth for their ongoing projects, any significant increase in which shall remain a key rating sensitivity.
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 firm will remain susceptible to risks arising from any industry slowdown.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Higher-than-expected sales of inventory along with timely receipt of customer advances
Potential triggers (individual or collective) for a downward rating action:
Delay in completion of the ongoing real estate projects resulting in cost overruns
Firm’s average DSCR falling below 1.5 times
Liquidity Position
Adequate
Liquidity is marked adequate supported by promoter infusions, bank loan disbursements and steady customer collections. Further, the firm is projected to maintain adequate liquidity, with an expected average debt service coverage ratio (DSCR) of 2.11 times across the debt tenure. This provides comfort in terms of debt servicing capacity and supports the firm’s overall financial flexibility. Moreover, the liquidity is supported by moderate utilisation of fund-based limits which stood at an average of 70.08 percent for the past twelve months ended December 2025. Further, the firm has unsold inventory from the previously completed projects (amounting to Rs. 94 Cr. as of Dec 2025) which is expected to provide additional liquidity to the firm.
Outlook: Stable
Other Factors affecting Rating
None
Particulars
Unit
FY 25 (Actual)
FY 24 (Actual)
Operating Income
Rs. Cr.
114.43
82.89
PAT
Rs. Cr.
7.98
8.72
PAT Margin
(%)
6.98
10.52
Total Debt/Tangible Net Worth
Times
4.93
4.41
PBDIT/Interest
Times
2.25
2.09
Status of non-cooperation with previous CRA (if applicable)
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Contacts
List of instruments and names of regulators of the instruments
