| Experienced management in real-estate business
The group is promoted by Mr. B.K. Agrawala having an experience of more than two decades. He is further supported by Mrs. Anushri Agrawala, having around two decades of experience in the real estate business. The extensive experience of the promoters is reflected through the long-term lease agreements with its reputed tenants such as Shoppers Stop, Smart Bazaar, Reliance Trends, PVR Ltd among others. The long-term lease agreements ensure stable and timely rental income during the lease period. Acuité believes that the experienced management and long-term lease agreements with the reputed clientele will continue to benefit the group going forward.
Locational advantage
“Nucleus Mall” has the locational advantage, as it is located at Circular Road, Ranchi at the heart of the city and is surrounded by affluent residential colonies. The mall is around 4 kms from Ranchi Railway station and 8 kms from the airport. The close proximity of railway station and airport will help in attracting a lot of business travellers. The proposed shopping mall, “Nucleus City” will be located at Gymkhana Road, Ranchi at the heart of the city and is surrounded by affluent residential colonies. It’s the first ever project in the vicinity and is expected to draw huge customers. The site is around 7 Kms from Ranchi Railway station and 13 kms from the airport. Various infrastructure facilities such as power, water telecommunication is also easily available in the area. Further, labours both skilled and unskilled are abundantly available from surrounding areas.
Steady scale of operations
The group has achieved revenues of Rs. 54.42 Cr. in FY2024 as compared to Rs. 52.37 Cr. in FY2023. The steady stream of revenues is supported by the two fully operational malls. The “Nucleus mall” is fully occupied with reputed tenants namely, Shoppers Stop, Allen Solly, Manyavar, Bata, Lenskart, KFC, PVR, among others. The mall has signed lease agreements for 9-19 years with minimum 1-5 years lock in period and price escalation after every three years. Moreover, the “Nucleus Heights Mall” is fully operational since April 2022 and it has tied up with reputed brands like Shoppers Stop, Color Bar Cosmetics Pvt. Ltd., Inc5 Shoes Pvt. Ltd., The Crepe Café. In addition to this, the management has been able to formally enter into an agreement with Shoppers Stop, Pantaloons, Inox, Mamaearth, Sketchers, Tata Croma, Turtle Limited to set up their store inside the upcoming “Nucleus City” mall which is a part of CREL. The “Nucleus City” mall is expected to become operational from August 2025. Acuite believes that the revenue profile is expected to be stable backed by confirmed lease agreements with reputed clientele.
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| Moderate financial risk profile
The group’s moderate financial risk profile is marked by improving networth, high gearing and moderate debt protection metrics. The net worth of the group increased to Rs.85.97 Cr. as on March 31, 2024 from Rs.74.56 Cr. as on March 31, 2023. Gearing of the group stood high at 6.55 times as on March 31, 2024 as against 6.79 times as on March 31, 2023. The bank debt has increased during FY2024, with the incremental debt primarily comprising of LRD loans and loans taken for capital expenditure, but the debt is substantially backed by stable rent generating assets. The Interest Coverage Ratio stood at 1.85 times in FY2024 as against 2.04 times in FY2023. Acuité believes the steady lease rentals from the commercial portfolio and good saleability in residential projects and off-take from hotel business shall help in improving the financial risk profile characterized by a modest debt service coverage ratio over the medium term.
Risks related to execution of the ongoing projects
The group has three ongoing projects with two projects (Mall and Residential Project) in CREL and one project (Hotel) in ARPL. The group is engaged in the construction of a residential project spread across 2.67 acre of land with 4 residential towers of 2 basement + G + 13 structures. The project is expected to be completed by end of FY2025. Further, the group is constructing the Nucleus City Mall under CREL, the Commercial Operation Date (COD) of the mall has been revised for the second time to Q2 FY2026 on account of operational delays faced by the group. In addition to this, the expected completion of the hotel under ARPL is also postponed to end of FY2025 owing to operational delays. Acuité believes that timely completion of the said projects without further delays will remain a key rating sensitivity factor.
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