Product Quantum (Rs. Cr) Long Term Rating Short Term Rating
Bank Loan Ratings 20.00 ACUITE BBB+ | Negative | Reaffirmed | Stable to Negative -
Bank Loan Ratings 45.00 - ACUITE A2 | Reaffirmed
Total Outstanding 65.00 - -
Total Withdrawn 0.00 - -
 
Rating Rationale

­­Acuité has reaffirmed the long term rating of ‘ACUITE BBB+’ (read as ACUITE triple B plus) and short term rating of ‘ACUITE A2’ (read as ACUITE A two) on the Rs. 65.00 crore bank facilities of Bharat Rail Automations Private Limited (BRAPL). The outlook is revised from 'Stable' to 'Negative.'

Rationale for reaffirmation and revision in outlook.
The revision in outlook takes into account the stagnant operating performance of the company with declining operating margins over the years. However, the rating reaffirmation factors in the moderate financial risk profile of the company coupled with a healthy order book position with strong counterparty of Indian Railways which is expected to improve revenues over the medium term. The rating is however constrained by the intensive working capital operations, tender based nature of operations and competition in the industry.
 

About the Company

Bharat Rail Automation Private Limited (BRAPL) was established as a partnership firm by Mr. Bhupesh Dhabalia and Mr. Bharat Dhabalia in the year 1986 and was converted to a Private Limited entity in 2004. Headquartered in Mumbai, the company is engaged in infrastructure projects of railways which includes installations of Railway Safety and signalling systems i.e., installation of SSI, Panel interlocking and Route Relay Interlocking, Automatic signalling etc. It is a Class-I signalling contractor.
 
Unsupported Rating
Not Applicable
 
Analytical Approach

­­Acuité has considered the standalone business and financial risk profiles of BRAPL for arriving at the rating.
 
Key Rating Drivers

Strengths
Established track record of operations with a healthy order book position
BRAPL is promoted by Mr. Bhupesh Dhabalia and Mr. Bharat Dhabalia  who have experience of more than three decades in the industry. The company is empaneled as a Class-I signaling contractor and has ISO 9001:2008 certification for Design of Signaling Equipment System and Installation, Testing & Commissioning of Signaling Projects. As on December 31, 2024, BRAPL's unexecuted order book position stood at Rs. 545.36 Cr, which provides a healthy revenue visibility over the medium term.

Acuité believes that long standing experience of the promoter and timely execution of the projects shall improve the revenue over the medium term.

Moderate Financial Risk Profile
BRAPL’s financial risk profile is supported by moderate networth, low gearing and comfortable debt protection metrics. The networth of the company has been continuously growing as evident with balance of Rs. 61.07 Cr. on March 31, 2024 as against Rs. 54.95 Cr. on March 31, 2023, which has led to sustained level of TOL/TNW at 0.75 times as on March 31, 2024 as compare to 0.72 times in the previous year. The Debt- EBITDA levels; though increased due to rise in working capital borrowings, continue to remain moderate at 1.56 times on March 31, 2024 as against 1.31 times in the previous year. The gearing remains below unity at 0.26 times on March 31, 2024 as against 0.19 times on March 31, 2023.
The coverage indicators stand comfortable; with Interest Coverage Ratio (ICR) at 5.37 times and Debt Service Coverage Ratio (DSCR) at 4.27 times on March 31, 2024.

The financial risk profile of BRAPL is expected to remain moderate in the near term, in absence of any major debt funded capex plans.

Weaknesses
Modest scale of operations and range bound profitability margins
The scale of operations of BRAPL has remained modest, with a revenue of Rs. 122.89 Cr in FY24 as against Rs.102.73 Cr in FY23 and Rs. 116.25 Cr in FY22. Further in 8M FY25, the company has recorded a revenue of Rs. 64.83 Cr and expected to achieve a revenue target in similar lines of FY24. The operating margins have deteriorated over the years with EBITDA margin of 7.17 percent in FY24 as against 6.42 percent in FY23 and 7.15 percent in FY22 due to rising input costs and absence of cost pass through clauses in majority of the contracts.

Acuite believes that the ability to improve the scale of operations and profitability levels while maintaining healthy capital structure will be a key rating sensitivity.

Working Capital Intensive operations
The operations of BRAPL are working capital intensive as evident from GCA of 235 days on March 31, 2024 as against 240 days on March 31, 2023. This is mainly attributable to increase in the inventory holding period from 93 days in as on March 31, 2024 as against 66 days on March 31, 2023. The debtors include pending receipts from Indian Railways. The debtor days though improved but remained high at 136 days as on March 31, 2024 as against 154 days on March 31, 2023.  The creditor days stood at 129 as on March 31, 2024 as against 128 days on March 31, 2023. Therefore, restriction of further elongation in the working capital cycle will be a key rating sensitivity.

Tender based nature of operations and competitive industry
The revenues of BRAPL are generated through tender based orders floated by Indian Railways coupled with the increasing competition in the industry.
Rating Sensitivities
­
  • Improvement in the scale of operations and profitability levels ?
  • Restriction of further elongation in the working capital cycle
  • Improvement in the financial risk profile
 
Liquidity Position
Adequate

The liquidity position of the company is adequate marked by adequate net cash accruals of Rs. 6.29 Cr in FY2024 against no repayment obligations. The current ratio stood at 2.51 times on March 31, 2024. The average bank limit utilisation of the company stood at 56.01 percent for eight months ended November 2024.
Acuité believes that the liquidity of the company is expected to remain adequate over the medium term.
 
Outlook: Negative
­
 
Other Factors affecting Rating
­None
 

Particulars Unit FY 24 (Actual) FY 23 (Actual)
Operating Income Rs. Cr. 122.89 102.73
PAT Rs. Cr. 6.12 4.71
PAT Margin (%) 4.98 4.59
Total Debt/Tangible Net Worth Times 0.26 0.19
PBDIT/Interest Times 5.37 5.80
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
• 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

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
18 Oct 2023 Bank Guarantee/Letter of Guarantee Short Term 45.00 ACUITE A2 (Reaffirmed)
Cash Credit Long Term 20.00 ACUITE BBB+ | Stable (Reaffirmed)
21 Jul 2022 Bank Guarantee/Letter of Guarantee Short Term 45.00 ACUITE A2 (Reaffirmed)
Cash Credit Long Term 20.00 ACUITE BBB+ | Stable (Reaffirmed)
­

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum
(Rs. Cr.)		 Complexity Level Rating
Bank of Baroda Not avl. / Not appl. Bank Guarantee/Letter of Guarantee Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 45.00 Simple ACUITE A2 | Reaffirmed
Bank of Baroda Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 20.00 Simple ACUITE BBB+ | Negative | Reaffirmed | Stable to Negative

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