|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 87.50 | ACUITE BBB+ | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 183.00 | - | ACUITE A2 | Reaffirmed & Withdrawn |
| Total Outstanding Quantum (Rs. Cr) | 0.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 270.50 | - | - |
| Rating Rationale |
|
Acuité has reaffirmed and withdrawn the long term rating of ‘ACUITE BBB+’ (read as ACUITE Triple B plus) on the Rs.87.50 Cr. bank facilities of B P Equities Private Limited (BEPL).
Acuité has reaffirmed and withdrawn the short term rating of ‘ACUITE A2’ (read as ACUITE A Two) on the Rs.183.00 Cr. bank facilities of B P Equities Private Limited (BEPL). The rating is withdrawn on account of the request received from the company and NOC received from the banker. The withdrawal is as per Acuité’s policy on withdrawal of ratings. |
| About the company |
|
Incorporated in 1997, Mumbai based BP Equities Private Limited (BEPL) is a share broking company engaged in brokerage services for various securities and providing depository services, distribution of mutual funds, and insurance broking. BEPL is promoted by holding company BP Wealth Management Private Limited. BP Wealth Management Private Limited has two subsidiary companies BP Equities Private Limited and BP Comtrade Private Limited (BCPL). BCPL, incorporated in 1994, is engaged in brokerage services and trading of commodity contracts. The business operations are currently managed by Mr. Yuvraj A. Thakker who is part of the promoter family and his team of professionals.
|
| Analytical Approach |
|
Extent of Consolodition
Full Consolidation Rationale for Consolidation or Parent / Group / Govt. Support Acuite has consolidated the business and financial risk profiles of BP Equities Private Limited
(BEPL), BP Wealth Management Private Limited (BWPL) and BP Comtrade Private Limited (BCPL) together referred to as the BP Group. The consolidation is in view of the common shareholding, management and significant operational and financial linkages between the various companies of the group. |
Key Rating Drivers
| Strength |
| Long track record in capital markets
Mr. Babubhai P Thakker founded the BP Group in 1987 and later incorporated the company in 1997. The Group’s major area of focus has been Stock Broking, Commodity Broking, Equity Research, IPO’s, Mutual Fund, Insurance and Distribution. With a track record of operations of over three decades, the BP Group has established a strong client base having a mix of retail as well as institutional clients. The group is currently headed by Mr. Yuvraj A. Thakker along with a team of seasoned professionals, possessing more than two decades of experience in the equity broking and capital market related businesses. The company’s research and technology driven focus has enabled it to come up with an online application/ platform ‘StoXBoX’ wherein the company offers sectoral baskets of equities, mutual funds, ETF’s for long term and short term portfolio based on an investment strategy supported by the company’s research and back-testing process. While the group is yet to demonstrate a steady growth in its stock broking businesses, the current focus of the management to develop new products and services for new client acquisitions is expected to lead to a moderate growth in revenues over the medium term.
Acuité believes that the BP group will continue to benefit from its steady HNI and institutional clientele, its healthy client relationships and its experienced management team backed by a favourable capital market environment. Adequate Risk Management Systems BP Group continues to have an adequate risk management system. It manages risk by monitoring Value -at-Risk (VaR), time based squaring off, value based squaring off etc. The backend operations team also manages risk through monitoring each and every transaction that takes place. This is particularly relevant for its proprietary trading positions.
Acuité believes the group’s risk management practices will remain adequate and support the continuity of its broking and trading operations. |
| Weakness |
| Susceptibility to uncertainties inherent in the capital markets business
Broking is a highly volatile and cyclical business with the presence of a large number of established players who provide significant competition to the other fragmented and small players. The company's operating performance is linked to the capital markets, which are inherently volatile as they are driven by economic and political factors as well as investor sentiments. Trading volume and earnings depend heavily on the level of trading activity in capital market. The group’s revenue has been significantly dependent on proprietary trading income which is inherently volatile. During FY2022 the company was able to generate a revenue of Rs. 30.79 Cr as against Rs.18.63 Cr. in FY2021. The EBITDA at group level improved to Rs. 48.02 Cr. in FY2022 from Rs.37.05 Cr. in FY2021, owing to the reduction in operating expenses as the operating income stood stagnent at ~Rs. 118 Cr..
Given the competition from larger brokerages and technology-focused new entrants, the ability of the group to grow its brokerage revenues on a sustainable basis will be a key monitorable. Acuité believes that the level of activity in the capital markets will continue to be a key determinant of its revenue profile and future growth trajectory. |
| Rating Sensitivity |
|
| Material Covenants |
| BEPL is subject to covenants stipulated by its lenders/investors in respect of minimum networth stipulation. |
| Liquidity Position |
| Adequate |
|
The group maintained cash and bank balances of Rs. 182.47 Cr as on March 31, 2022. The group has limited dependence on working capital borrowings; the overdraft limit of the group remains moderately utilised at 20 percent to 30 percent. Acuité believes that the liquidity of the group is likely to remain healthy over the near to medium term with improved cash accruals and low debt repayment obligations.
|
| Outlook : |
| Not Applicable |
| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | |||||||||||||||||||||||||
|
|||||||||||||||||||||||||
| Key Financials - Consolidated | |||||||||||||||||||||||||
|
|||||||||||||||||||||||||
| Status of non-cooperation with previous CRA (if applicable): |
| None |
| Any other information |
| None |
| Applicable Criteria |
|
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.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.
|
|
| |
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |
|
Contacts |
| Analytical | Rating Desk |
| About Acuité Ratings & Research |
