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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 15.00 | ACUITE BBB | Stable | Assigned | - |
| Bank Loan Ratings | 26.69 | ACUITE BBB | Stable | Upgraded | - |
| Bank Loan Ratings | 5.00 | - | ACUITE A3+ | Upgraded |
| Total Outstanding | 46.69 | - | - |
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Rating Rationale |
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Acuité has upgraded the long term rating to ‘ACUITE BBB’ (read as ACUITE triple B) from ‘ACUITE BBB-’ (read as ACUITE triple B minus) and short term rating to ‘ACUITE A3+’ (read as ACUITE A three plus) from ‘ACUITE A3’ (read as ACUITE A three) on the Rs.31.69 Cr bank facilities of Icon Solar-En Power Technologies Private Limited (ISPTPL). The outlook is ‘Stable’.
Also, Acuité has assigned the long term rating to ‘ACUITE BBB’ (read as ACUITE triple B) on the Rs.15.00 Cr bank facilities of Icon Solar-En Power Technologies Private Limited (ISPTPL). The outlook is ‘Stable’. Rationale for rating The rating takes into cognizance the improving business and financial risk profile of the company driven by increase in revenues, profitability margins, improving working capital cycle and interest coverage and debt service coverage ratios. It considers the steady scale of operations of the company along with enhancing product portfolio. The revenues of the company stood at Rs.486.97 crores in FY23, a growth of 55% since past year revenues of 314.29 crores in FY22. Along with increase in revenues, the operating margins of the company has also improved to 2.82 per cent in FY23 from 2.50% in FY22. Acuite also notes the improvement in profitability margins, PAT margins increasing to 1.32 percent in FY23 from 0.82 percent in FY22. The rating also factors in the further improvement in the financial risk profile marked by a growing adjusted net worth due to steady accruals, stable adjusted gearing of 0.73 times as on March 31, 2023, and moderate levels of debt protection metrics. The adequate liquidity position is reflected in the steady accruals which is sufficient to meet its debt repayments, moderate current ratio and absence of debt funded capex plans over the medium term. The bank lines have also been moderately utilised with fund-based bank limits at ~87.68 per cent for the 6-month period months ended Dec’23. The rating also factors in the improving Gross Current Asset (GCA) days from 119 days in FY22 to 61 days in FY23 thus reflecting the improving efficiency in the core operations of the organisation. Further, the shift in sourcing of raw materials from foreign manufacturers to domestic manufacturers shows improved stability in raw materials procurement and improving inventory days. However, these strengths are partly offset by the volatility in raw material prices. |
| About the Company |
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Icon Solar-En Power Technologies Private Limited (ISPTPL), incorporated in 2014, is based in Raipur, Chhattisgarh. With an installed capacity of 125 MW (200 MW added since December 2023), the company manufactures and distributes Solar PV modules ranging in power from 40 to 660 watts along with providing comprehensive Roof Top solar solutions for homes. The company even undertakes engineering, procurement, and construction (EPC) of solar modules. The company’s products are Approved List of Models and Manufacturers (ALMM) accredited and listed which gives them an edge in procuring government orders and tenders, the present year approval for enlistment under ALMM is awaited. It is currently headed by Mr. Shakti Kumar Dubey, Mr. Vipin Mirani and Mr. Tarang Khurana.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuité has taken a standalone view of the business and financial risk profile of ISPTPL to arrive at the rating.
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| Key Rating Drivers |
| Strengths |
The company has a long operational track record of around 10 years. Further, the leadership team are from diverse backgrounds and have extensive experience of the industry. As a result, the Company has been able to establish healthy relationship with customers and suppliers. The company has increased its capacity to 325 MW in FY2024 for expanding its business as the management expects the demand for this business to grow further. Acuité believes that the long operational track record and extensive experience of the management shall support the business risk profile of the management to an extent.
The operating income of the company stood at Rs.486.97 Cr. in FY2023 as against Rs.314.29 Cr in FY2022, which is a growth of 55% on a year-to-year basis. Although a marginal increase, the company been able to improve its sales realization for Solar P/V modules during current year which is expected to reflect in revenues. The company has achieved a revenue of around Rs.341 Cr till 31st December 2023 (Provisional). Furthermore, the company has reduced its order execution period from 4-5 months earlier to 2-3 months currently. ISPTPL has an unexecuted fixed order book position to the tune of Rs.72.37 Cr. as on 31st December 2023 corresponding to a cumulative 30.93 MW and receives open ended orders from its customers on a regular basis.
The operating margin of the Company has improved to 2.82% in FY2023 from 2.50% in FY2022. This has been a result of improved sourcing of raw materials from domestic market and lower gestation period of orders. Also, the operating margins as on 31st December 2023 stood at 5.51% (Provisional). Acuité believes that the company will continue to sustain its order book position and maintain its business risk profile over the medium term.
The Company’s financial risk profile is marked by a heathy adjusted net worth, improvement in adjusted gearing and comfortable debt protection metrics. The tangible adjusted net worth of the company improved to Rs.31.23 Cr in FY23 from Rs. 26.83 Cr in FY2022, a growth of 32.96%. due to accretion to reserves. Acuite has treated unsecured loans of Rs. 5.05 Cr as quasi equity since these are subordinated to bank loans. The company’s Debt-Equity ratio remained stable at 0.73 times in FY23 as compared to a ratio of 0.71 times in FY22. The Total outside Liabilities/Tangible Net Worth (TOL/TNW) has also improved to 2.03 times as on 31st March 2023 as against 3.17 times as on 31st March 2022. The company has small capex plans moving forward and aims to reduce gearing ratios to further lower levels and thus stabilising its capital structure.
ISPTPL’s Interest Coverage Ratio (ICR) and Debt Service Coverage Ratio (DSCR) has also improved to 3.37 times in FY23 from 2.45 times in FY 22 and to 1.86 times in FY23 to 1.26 times in FY22 respectively. Acuite believes that in the foreseeable future, the financial risk profile of the company will improve backed by improving profitability, reduced gearing and comfortable debt protection metrices |
| Weaknesses |
The profitability indicators remain exposed to the volatility in price movements of key raw materials (RM) like solar cells, glass, back sheet and aluminium, among others. Moreover, given the lack of backward integration and limited capacities in India, the company remains exposed to pricing and availability risks. The company’s margins are also impacted by the volatility in commodity price hikes such as glass and metals. The margins have improved as the company has entered into short term fixed price contracts for purchase of raw materials on receipt of sales order thereby even safeguarding itself to some extent from raw material price volatility.
While the competition from imports is mitigated through policy measures like ALMM and imposition of Basic Custom Duty (BCD), the company remains exposed to competition from other domestic manufacturers, especially with the announcement of large expansion plans by existing players and entry of large new players. Also, the growing demands of renewable sources of energy has resulted in the entry of more players into this sector.
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| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The company’s liquidity is adequate marked by net cash accruals of Rs. 7.57 Cr. in FY2023 as against long term debt repayment of Rs.2.15 Cr. over the same period. The current ratio is moderate at 1.39 times as on March 31, 2023. The promoters also have the financial flexibility to bring in funds in the business as reflected in unsecured loans that have been brought in historically. The company has Rs.5.05 cr. of unsecured loan subordinated against bank loans . The fund-based bank limit remained moderately utilised at 87.68 per cent and the non-fund based facility remained utilised at 24.48 per cent for the last nine months ended December 2023. Acuité believes that the liquidity position of the company is likely to remain adequate backed by the steady accruals, absence of debt funded capex plans and moderate current ratio over the medium term.
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| Outlook: Stable |
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Acuité believes the company’s outlook will remain stable over the medium term on account of its experienced management, improved business risk profile and favourable outlook of the industry. The outlook may be revised to 'Positive' in case the company registers higher than expected growth in revenues while sustaining its operating margins or improvement in its capital structure. Conversely, the outlook may be revised to 'Negative' in case of higher than expected stretch in the working capital cycle or deterioration in the financial risk profile of the company.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 486.97 | 314.29 |
| PAT | Rs. Cr. | 6.41 | 2.51 |
| PAT Margin | (%) | 1.32 | 0.80 |
| Total Debt/Tangible Net Worth | Times | 0.73 | 0.71 |
| PBDIT/Interest | Times | 3.37 | 2.45 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.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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