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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 200.00 | ACUITE BBB- | Stable | Assigned | - |
| Non Convertible Debentures (NCD) | 200.00 | ACUITE BBB- | Stable | Assigned | - |
| Total Outstanding | 400.00 | - | - |
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Rating Rationale |
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ACUITE has assigned its long term rating of 'ACUITE BBB-' (Read as ACUITE triple B minus) on the Rs.200.00 Crore bank facilities of Elan Imperial Private Limited (EIPL). The outlook is 'Stable'.
ACUITE has assigned its long term rating of 'ACUITE BBB-' (Read as ACUITE triple B minus) on the Rs.200.00 Crore Non Convertible Debentures of Elan Imperial Private Limited (EIPL). The outlook is 'Stable'. Rationale for Rating The assigned rating is primarily based on the company's steady revenue velocity, mitigation of project-related risk, and significant increase in financial flexibility, all of which strengthen its overall credit profile. Due to its presence in both commercial and residential real estate, the company's diverse portfolio reduces the risk associated with any one industry. Group has already sold approximately 90% of the inventory for all launched projects. Upcoming projects will majorly be funded from internal accruals limiting the funding risk. Collection efficiency from already sold inventorywill remain rating sensitivity factor. Rating continues to reflect the company's healthy business risk profile supported by healthy booking and customer receipts for the on-going project. Comfortable debt-service coverage ratio (DSCR) along with an extended support given by group with an availability of fund-fungibility across all the projects, brings an additional comfort. These strengths are partially offset by project risk associated with few projects wherein the construction is at an initial stage of execution, geographical concentration in revenue, and exposure to risks from cyclicality in the real estate sector. Acuite believes that company will continue to benefit from its established market position in the Gurugram region and limited funding & demand risk. However, the collection efficiency for the individual projects and optimum utilization of funds will remain key rating sensitivity. |
| About the Company |
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Incorporated in 2008 Elan Imperial Private Limited is based in Gurugram. It is a part of Elan Group and is into the business of real estate development. The directors are Mr. Ravish Kapoor, Mr. Akash Kapoor and Mr. Gaurav Khandelwal.
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| About the Group |
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Elan Buildcon Private Limited
Incorporated in 2014, Elan Buildcon Private Limited is based in Gurugram. The company is engaged in Real estate activities. It has already completed 2 projects i.e. Elan Mercado and Elan Epic in Gurugram. The directors are Mr. Ravish Kapoor and Mr. Akash Kapoor. Elan City LLP Incorporated in 2020, Elan City LLP is based in Gurugram. The company is engaged in Real estate activities. The Partners are Mr. Ravish Kapoor and Mr. Akash Kapoor. Elan Avenue Limited Incorporated in 2007, Elan Avenue Limited is based in Gurugram. The Company is engaged in the Real Estate Industry. The directors are Mr. Ravish Kapoor, Mr. Akash Kapoor and Mr. Gaurav Khandelwal. Elan Limited Incorporated in 2013 Elan Limited is based in Gurugram. The company is engaged in Real estate construction activities. The directors are Mr. Ravish Kapoor, Mr. Akash Kapoor and Mr. Gaurav Khandelwal. |
| Unsupported Rating |
| Not applicable. |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has consolidated the financial and business risk profile Elan Limited, Elan Avenue Limited, Elan City, Elan Imperial Private Limited and Elan Buildcon Private Limited. The consolidation is on account of common management, similar line of business, and operational linkage.
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| Key Rating Drivers |
| Strengths |
| Experienced promoters with established track record of operations
Elan Group is promoted by Mr. Ravish Kapoor, Mr. Akash Kapoor and Mr. Gaurav Khandelwal, Mr. Ravish Kapoor has been overseeing sales and marketing of the company and Mr Akash Kapoor is responsible for group’s operations across the finance and administrative verticals. They have been in the real estate business for more than 15 years, and their extended market presence has aided the business in building strong client relationships. The promoters have a wealth of knowledge in the micro market because the group has completed several commercial projects in the Gurugram area in the past. Healthy booking progress and customer advances in project The Company has achieved healthy sales in respective project, out of the total assets which the group currently has, 90% of the same is already sold wherein, the company has received 30% advances from the customers. There has also been an ample flow of advances from sold commercial and residential properties. An adequate sales velocity gives sustained cash flow visibility. However, the group has collected 29.84% of total sales value as against construction progress of 49.81% as on 31st March 2024 indicating low collection efficiency and the same needs to be monitored. The group is expected to receive healthy surplus from receivables from the respective projects also from customer advances to be received (both tied up and future sales) which is expected to be adequate to support the remaining construction of all ongoing projects in the group. Comfortable Debt Service Coverage Ratio The project under development is funded by a combination of debt, customer advances and promoter funds. The group's high cash flow coverage ratio throughout the projections indicates that it is expected to have enough cash flow to fulfil its debt commitments. The overall cash flow for the group seems sufficient. |
| Weaknesses |
| Exposure to Execution risk and Funding Risk
Susceptibility to Real Estate Cyclicality and Regulatory Risks
The real estate industry in India is highly fragmented with most of the real estate developers, having a city specific or region-specific presence. The risks associated with real estate industry are cyclical in nature and directly linked to drop in property prices and interest rate risks, which could affect the operations. Given the high level of financial leverage, the high cost of borrowing prevents the real estate's developers' from significantly reducing prices to boost sales growth. Moreover, the industry is also exposed to certain regulatory risks linked to stamp duty and registration tax directly impacting the demand and thus the operating growth of real estate players. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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Supported by the healthy sales velocity and healthy receipt of customer advances for its projects, company currently has healthy liquidity (Rs.123.17 crore as on 31st March 2024). Furthermore, the company is expected to generate healthy surplus over medium term. The group has a comfortable DSCR of more than 1.5x from FY24 to FY27. Company is maintaining DSRA for the amount equivalent to three-month principal and interest supporting the liquidity.
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| Outlook: Stable |
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Acuité believes that group will continue to maintain a 'Stable' outlook over the near to medium term owing to its established market position in Gurugram and experience of management in the real estate market. The outlook may be revised to 'Positive' in case the company achieves higher than expected customer advances and the projects are executed within the timelines. Conversely, the outlook may be revised to 'Negative' if there are significant delays in the project execution impacting the liquidity and financial risk profile.
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| Other Factors affecting Rating |
| None. |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 687.32 | 201.07 |
| PAT | Rs. Cr. | 165.60 | (112.29) |
| PAT Margin | (%) | 24.09 | (55.85) |
| Total Debt/Tangible Net Worth | Times | (8.10) | (3.06) |
| PBDIT/Interest | Times | 2.90 | (1.14) |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| Any Other Information |
| None. |
| Applicable Criteria |
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• 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 • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.htm • Real Estate Entities: https://www.acuite.in/view-rating-criteria-63.htm |
| Note on Complexity Levels of the Rated Instrument |
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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
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| Rating History : |
| Not applicable. |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||||||
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