Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuité has reaffirmed its long-term rating of ‘ACUITE BBB’ (read as ACUITE Triple B) on the Rs 1055.00 crore bank facilities of Phoenix Tech Zone Private Limited (PTZPL). The outlook is 'Stable'.
Acuite has assigned long-term rating of ‘ACUITE BBB’ (read as ACUITE Triple B) on the Rs.233.00 crore bank facilities of Phoenix Tech Zone Private Limited (PTZPL). The outlook is 'Stable'.
Rationale for Rating The rating reaffirmation reflects the sustenance of adequacy of cash flows despite of addition of debt. The rating also factors in the experienced promoters and strong parentage of the company. Further, the rating factors in the reputed lessee profile consisting of big IT companies, and long-term lease agreements with substantial occupancy which mitigates offtake risk and gives revenue visibility in near to medium terms. The rating also draws comfort from the successful construction and commercialisation of the past projects. However, the rating is constrained due to the risk associated with timely renewal of lease agreements and exposure to inherent cyclicality in the real estate industry.
About the Company
Incorporated In 2014, Phoenix Tech Zone Private Limited (PTZPL), is engaged in the construction of IT/ITES SEZ, commercial projects in Hyderabad. The company is currently carrying out office space leasing under project Centaurus with leasable area of 2.14 million SFT out of which 0.50 million SFT belongs to landowners and remaining belongs to PTZPL. Other projects associated with PTZPL are Aquila and B-Hub which are already completed and generating cashflows in financial district, Hyderabad. The directors of the company are Mr. Gopi Krishna Patibanda and Mr. Jagadeesh Babu Ramanathan.
Unsupported Rating
Not Applicable
Analytical Approach
Acuité has considered standalone business and financial risk profile of PTZPL to arrive at rating.
Key Rating Drivers
Strengths
Strong parentage and established track record of operations Phoenix Tech Zone Private Limited (PTZPL), incorporated in 2014 is engaged in the construction of IT/ITES SEZ, commercial projects in Hyderabad. The group specializes in the development of IT/ITES Special Economic Zones, retail malls, residential and commercial complexes, automobile dealerships, and educational infrastructure. The Phoenix Group has developed and delivered over 24 million SFT of mixed-use spaces and has over 24 million SFT. of ongoing projects in various stages of development. Under PTZPL, the group is carrying out office space development under project Centaurus in financial district, Hyderabad. Centaurus has 3 basements + ground floor + 5 Stilts + 17 office floors with a total space of 2.14 million SFT under a Joint Development Agreements with landowners, Phoenix share is from Floor 1st -13th admeasuring 1.64 million SFT, while floors 14th– 17th belongs to landowner which the company has developed and successfully handed over to the landowners. Other projects associated with PTZPL are Aquila and B-hub which are successfully completed and are generating cashflows. Acuite believes the company will continue to benefit from its strong parentage, established track record of operations in the medium to long term.
Low execution & offtake risk The Centaurus project has achieved construction completion with a total leasable area of approximately 2.14 million sq. ft. Under the Joint Development Agreement (JDA) with the landowners, PTZPL has fulfilled its obligation by handing over 0.50 million sq. ft. to the landowners, while the balance 1.64 million sq. ft. (comprising the 1st to 13th office floors) remains under PTZPL's ownership. Of this area, approximately 1.44 million sq. ft. has already been leased out. Further, the company has received a Letter of Intent (LOI) for around 0.20 million sq. ft. from an existing tenant, with execution of the lease deed expected by March 2027. This is expected to increase occupancy to nearly 100%, while rental income has already commenced for approximately 85% of the total leasable area under PTZPL's ownership.
Adequate cashflow position Project Centaurus has a leasable area of 1.64 million SFT. The company has availed bank loan (LRD) for refinancing the loans availed for construction of project Centaurus. The debt service coverage ratio (DSCR) for this LRD loan is estimated to remain above unity at ~1.56 times over the tenure of the loan. Acuite believes, the debt coverage would remain adequate for the medium to long term on account of steady cash flows from lease rolls.
Weaknesses
Lessee concentration risk The lessee concentration risk is high with the top tenants occupying around ~55 per cent of the total leasable area. This also leads to higher risk on cash flow in case of delay in receiving rentals or sudden exit from key customers. Further, timely renewal of these lease agreements will remain as a key rating monitorable.
Exposure to inherent cyclicality in the real-estate industry Being a cyclical industry, the real estate is highly dependent on macro-economic factors which make the company’s cashflows are vulnerable to any downturn in the real-estate demand and competition within the region from various established developers.
ESG Factors Relevant for Rating
PTZPL's corporate governance philosophy is built on a legacy of fairness and transparency, aiming to enhance long-term shareholder value while upholding integrity and regulatory compliance.
Phoenix Foundation, in collaboration with the Telangana Forest Department, is establishing a 500-acre eco-forest in Moinabad. This project aims to plant a variety of trees to attract wildlife and birds, serve as a carbon sink to reduce pollution, and include walkways for visitors to enjoy the natural environment.
Misaal Hyderabad is a unique social welfare initiative that uses community art to enhance mental and physical health among slum dwellers. Through sanitation and cleanliness drives, it raises awareness about social improvement indicators. Key initiatives include art camps, balwadis and learning centres, and women empowerment & skill training camps. These efforts align with ESG criteria by addressing health, education, and gender equality, positively impacting the community and supporting sustainable development.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Timely execution of the lease deed for the identified space and commencement of rental inflows.
Improvement in overall cash flow position with average DSCR above 2.00 times consistently.
Potential triggers (individual or collective) for a downward rating action:
Delay in execution of the lease deed and/or lower-than-expected rental income from the proposed space, impacting occupancy levels and cash flow generation
DSCR falling below 1.10 times.
Liquidity Position
Adequate
The company has an adequate liquidity position marked by an adequate net cash accruals against maturing debt obligation. The NCA’s are expected to be at around Rs.90 Cr. as against maturing debt obligation of ~Rs.75 Cr. during Sept 2026 – March 2027 and further for FY28 the accruals are expected to be~Rs.330 Cr. as against repayment debt obligation of ~Rs.240 Cr. Further the liquidity is supported by expected average DSCR of ~1.56 times for the entire tenure of the LRD loan facility. Further the liquidity is supported from the presence of DSRA and ESCROW mechanism. The company maintains DSRA balance equivalent of three months of debt obligation of ~Rs.35.06 crores. PTZPL has an unencumbered cash and bank balance of Rs.22.25 crores as on March 31, 2026 (Prov.) which provides additional support to the liquidity profile of the company.
Outlook: Stable
Other Factors affecting Rating
None
Particulars
Unit
FY 26 (Provisional)
FY 25 (Actual)
Operating Income
Rs. Cr.
180.10
162.46
PAT
Rs. Cr.
11.28
9.48
PAT Margin
(%)
6.26
5.83
Total Debt/Tangible Net Worth
Times
6.43
6.78
PBDIT/Interest
Times
1.57
1.31
Status of non-cooperation with previous CRA (if applicable)
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Contacts
List of instruments and names of regulators of the instruments
