Press Release

Press Release

November 21, 2024

A B INFRABUILD LIMITED
Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	53.29	ACUITE BBB- \| Stable \| Reaffirmed	-
Bank Loan Ratings	31.71	-	ACUITE A3 \| Reaffirmed
Total Outstanding	85.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

Acuité has reaffirmed its long-term rating of ‘ACUITÉ BBB-' (read as ACUITE triple B minus) and short-term rating of ‘ACUITÉ A3’ (read as ACUITE A three) on the Rs. 85.00 Cr. bank facilities of A B Infrabuild Limited (ABIL). The outlook is ‘Stable’.

Rationale for rating
The rating reaffirmation considers H1FY25 performance of A B Infrabuild Limited. The operating revenue and profitability reported a decline on half yearly basis. The operating income stood at Rs.61.38 Cr. in H1FY25 as against Rs.107.94 Cr. in H1FY24. The moderation in the operating income is attributed to lower execution undertaken by the company as compared to previous year.

Further, the rating reaffirmation also factors in the established track record of the company for more than a decade in the construction industry, which has in turn supported the company in establishing strong relationships with its customer consisting mainly government authorities. The rating is further supported by healthy financial risk profile of the company marked by the low gearing and comfortable debt protection metrics with debt-equity stood at 0.5 times as on 31^st March, 2024 and DSCR stood at 3.00 times in FY24. However, these strengths are partly offset by moderately intensive working capital cycle of the company as marked by GCA days of 203 days consisting majorly of inventory. Further, the rating is constrained by intensity of competition in the industry due to the tender based nature of operations.

About the Company

Incorporated in 2011, A B Infrabuild Limited is based in Mumbai. The company is Grade "AA" contractor registered with Municipal Corporation of Greater Mumbai and Class 1(A) Contractor with Public Works Department, Maharashtra. The directors of the company are, Mr. Amit Bholanath Mishra, Mr. Udayan Anantrao Chindarkar, Ms. Vanita Vinodbhai Bhuva, Mr. Shreeprakash Deonarayan Singh, Mr. Mukesh Pandey, Mr. Bharatkumar Punmaji Parmar and Mr. Archana Rakesh Pandey.

Unsupported Rating

Not Applicable

Analytical Approach

Acuité has considered the standalone business and financial risk profiles of A B Infrabuild Limited to arrive at the rating.

Key Rating Drivers

Strengths

Established Track record of operations and experienced management
ABIL is an EPC contractor working majorly for Municipal Corporation of Greater Mumbai (MCGM), Dedicated Freight Corridor Corporation of India Limited an many other government agencies. Along with this company also undertakes private construction works. The company was incorporated in 2011 and over the years the company has gained extensive experience in the construction business. Over the past few years,the company is majorly engaged in civil construction for MCGM. The experience of the promoters can be seen from the increasing revenue for the company which grew by a CAGR of 69 percent in last two years on account of rising order book and timely execution of the projects. The revenue increased to Rs. 183.61 crore in FY2024 as against Rs. 122.21 crore in FY2023. However, the company has recorded a decline in revenue to Rs.61.38 crore for six months ended September 2024 as compared to Rs.107.94 crore in same period last year. To mitigate the
Weakness, the oustanding order book for the company has enhanced to Rs. 657crore as of November 2024 which provides significant revenue visibility over the medium term.
Acuité believes that the long operational track record and experience of management coupled with the healthy order book shall continue to benefit the company going forward, resulting in steady growth in the scale of operations.

Healthy Financial Risk Profile.
The financial risk profile of the company stood healthy, marked by healthy net worth, low gearing (debt-equity) and comfortable debt protection metrics. The tangible net worth stood at Rs. 81.55 crore as on 31 March 2024 as against Rs.35.32 crore as on 31 March 2023. Further the net-worth of the company increased to Rs.85.62 crore as on 30^th September 2024 on account of accretion of profits to reserve. The total debt of the company stood at Rs.41.10 crore which includes long term loan of Rs.19.67 crore and short term loan of 21.43 crore in terms of CC as on 31^st March 2024. The gearing (debt-equity) stood at 0.5 times as on 31 March 2024 as compared to 0.91 times as on 31 March 2023. Total outside Liabilities/Total Net Worth (TOL/TNW) stood at 0.91 times as on 31 March 2024 as against 2.52 times as on 31 March 2023. Interest Coverage Ratio stood at 4.66 times for FY2024 as against 3.47 times for FY2023. Debt Service Coverage Ratio (DSCR) stood at 3 times in FY2024 as against 2.4 times in FY2023. Net Cash Accruals to Total Debt (NCA/TD) stood at 0.36 times for FY2024 as against 0.26 times for FY2023.
Acuite believes the financial risk profile of the company may continue to remain healthy on account of steady cash accruals with no further debt-funded capex plans

Weaknesses

Intensive Working Capital Management
The working capital management of the company is moderately Intensive marked by GCA days of 203 days in FY24 as against 325 days in FY23. The GCA days have reduced on account of signifcant decline in inventory and debtors days for the company. The inventory days for the company stood high at 116 days in FY2024 as against 176 days in FY2023. Subsequently, the debtor’s collection period stood at 42 days in FY24 as against 96 days for FY23. However, the creditors days stood at 44 days in FY24 as against 144 days in FY23. As a result, the reliance on working capital limits is marked moderate, reflected by moderate utilizations of fund-based limit of around 87 percent in the last 11 months ended February 2024.
Acuite expects the working capital operations of the company may continue to remain at similar level due to nature of business in which the company operates.

Exposure to Intense competition in a fragmented industry
The infrastructure is a fairly fragmented industry with a presence of few large pan India players where subcontracting & project specific partnerships for technical/financial reasons are fairly common. The company faces stiff competition with its competitors in procuring orders through bidding, immense competition for procuring tenders leads to very competitive pricing which in turn lead to stress on the margins. Moreover, susceptibility of raw material pricing again keeps profit margin vulnerable and is a key sensitivity factor

Rating Sensitivities

Any deterioration in financial risk profile.
Improvement in the scale of operations with improving operating margins.

Liquidity Position

Adequate

The company’s liquidity position is adequate, marked by sufficient net cash accruals against the maturing debt obligations. The company generated net cash accruals of Rs.14.91 crore in FY2024 as against maturing repayment obligations of Rs.2.22 crore during the same tenure. In addition, it is expected to generate sufficient cash accrual against the maturing repayment obligations over the medium term. However, the working capital management of the company is moderated comparatively to FY23 marked by GCA days of 203 days in FY24 as against 325 days in FY2023. Further, the reliance on working capital limits is marked moderate, reflected by average utilizations of fund-based limit of around 87 percent in the last 11 months ended February’ 2024. The current ratio stands at 2.05 times as on March 31, 2024 as against 1.51 times as on 31 March 2023.
Acuite believes the liquidity position of the company may continue to remain adequate with steady cash accruals.

Outlook : Stable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 24 (Actual)	FY 23 (Actual)
Operating Income	Rs. Cr.	183.61	122.21
PAT	Rs. Cr.	11.42	7.54
PAT Margin	(%)	6.22	6.17
Total Debt/Tangible Net Worth	Times	0.50	0.91
PBDIT/Interest	Times	4.66	3.47

Status of non-cooperation with previous CRA (if applicable)

Not Applicable

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.htm
• Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
22 May 2024	Bank Guarantee (BLR)	Short Term	10.21	ACUITE A3 (Assigned)
	Bank Guarantee (BLR)	Short Term	6.00	ACUITE A3 (Assigned)
	Bank Guarantee (BLR)	Short Term	15.50	ACUITE A3 (Assigned)
	Cash Credit	Long Term	2.50	ACUITE BBB- \| Stable (Assigned)
	Cash Credit	Long Term	15.30	ACUITE BBB- \| Stable (Assigned)
	Funded Interest Term Loan	Long Term	1.55	ACUITE BBB- \| Stable (Assigned)
	Working Capital Term Loan	Long Term	1.48	ACUITE BBB- \| Stable (Assigned)
	Cash Credit	Long Term	4.70	ACUITE BBB- \| Stable (Assigned)
	Funded Interest Term Loan	Long Term	0.50	ACUITE BBB- \| Stable (Assigned)
	Working Capital Term Loan	Long Term	0.43	ACUITE BBB- \| Stable (Assigned)
	Proposed Long Term Bank Facility	Long Term	26.83	ACUITE BBB- \| Stable (Assigned)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
The Shamrao Vithal Cooperative Bank Ltd	Not avl. / Not appl.	Bank Guarantee (BLR)	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	10.21	Simple	ACUITE A3 \| Reaffirmed
Janata Sahakari Bank Ltd (Pune)	Not avl. / Not appl.	Bank Guarantee (BLR)	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	6.00	Simple	ACUITE A3 \| Reaffirmed
Bank of Maharashtra	Not avl. / Not appl.	Bank Guarantee (BLR)	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	15.50	Simple	ACUITE A3 \| Reaffirmed
Bank of Maharashtra	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	2.50	Simple	ACUITE BBB- \| Stable \| Reaffirmed
The Shamrao Vithal Cooperative Bank Ltd	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	15.30	Simple	ACUITE BBB- \| Stable \| Reaffirmed
Janata Sahakari Bank Ltd (Pune)	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	4.70	Simple	ACUITE BBB- \| Stable \| Reaffirmed
Janata Sahakari Bank Ltd (Pune)	Not avl. / Not appl.	Funded Interest Term Loan	01 Sep 2022	Not avl. / Not appl.	01 Aug 2029	0.50	Simple	ACUITE BBB- \| Stable \| Reaffirmed
The Shamrao Vithal Cooperative Bank Ltd	Not avl. / Not appl.	Funded Interest Term Loan	01 Sep 2022	Not avl. / Not appl.	01 Aug 2029	1.55	Simple	ACUITE BBB- \| Stable \| Reaffirmed
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	26.83	Simple	ACUITE BBB- \| Stable \| Reaffirmed
The Shamrao Vithal Cooperative Bank Ltd	Not avl. / Not appl.	Working Capital Term Loan	01 Sep 2022	Not avl. / Not appl.	01 Aug 2029	1.48	Simple	ACUITE BBB- \| Stable \| Reaffirmed
Janata Sahakari Bank Ltd (Pune)	Not avl. / Not appl.	Working Capital Term Loan	01 Sep 2022	Not avl. / Not appl.	01 Aug 2029	0.43	Simple	ACUITE BBB- \| Stable \| Reaffirmed

Contacts

Mohit Jain
Senior Vice President - Rating Operations

Parth Patel
Lead Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.