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Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
Bank Loan Ratings | 63.00 | ACUITE BBB | Stable | Upgraded | - |
Bank Loan Ratings | 1.00 | - | ACUITE A3+ | Upgraded |
Total Outstanding | 64.00 | - | - |
Rating Rationale |
Acuité has upgraded its long-term rating to ‘ACUITE BBB’ (read as ACUITE Triple B) from 'ACUITE BBB-' (read as ACUITE triple B minus) and its short-term rating to 'ACUITE A3+' (read as ACUITE A three plus) from ‘ACUITE A3’ (read as ACUITE A three) on the Rs. 64.00 crore bank facilities of Raffles Square Development Private Limited (RSDPL). The outlook is ‘Stable’
Rationale for Upgrade The rating upgrade takes into account, the improvement in the business, liquidity and financial risk profile of RSDPL. The company’s revenue has recorded a consistent improvement over the last few years as its revenue improved from Rs.9.04 Cr. in FY2021 to Rs.48.05 Cr. in FY2023 with a CAGR of 166% from FY2021-FY2023. The company has generated revenue of ~Rs. 54 Cr. in FY2024E. The company has demonstrated improvement in the operational efficiency as the EBITDA margins reflected an upward trend and reached 39.86% in FY2023 from 24.83% in FY2022 from a loss of (13.73)% in FY2021. In FY2024E, the operating margin range between ~40-42%. The net profitability levels have also recorded a similar trend as the it improved from a loss of (18.33) percentage in FY2022 to a Profit of 12.52 percentage in FY2023. The company’s operational metrics also improved as the occupancy level for Pune hotel increased from 23 percentage in FY2022 to 73 percentage in FY2023 and for Goa hotel, the occupancy levels have increased from 55 percentage in FY2022 to 71 percentage in FY2023.
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About the Company |
Raffles Square Development Private Limited (RSDPL) was incorporated in 2005 and is primarily involved in the hospitality business. The company currently owns two properties i.e. a five star hotel in Pune located at Koregaon Park area started in 2008 and a five star resort in Candolim, Goa started in 2009. Both the properties are under “O” hotel brand. RSDPL belongs to the Oxford Group which has successfully developed about 3 million square feet of commercial and residential developments in Pune.
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Unsupported Rating |
Not Applicable |
Analytical Approach |
Acuité has considered the standalone view of business and financial risk profiles of RSDPL to arrive at this rating.
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Key Rating Drivers |
Strengths |
Established track record of operations along with experienced management |
Weaknesses |
Highly competitive industry |
Rating Sensitivities |
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Liquidity Position |
Adequate |
The liquidity position of RSDPL is adequate marked by moderate net cash accruals as against its maturing debt obligations. The company generated net cash accruals of Rs.9.08 crore for FY2023 against maturing debt obligation of Rs.1.35 crore during the same period. The company is estimated to generate net cash accruals in the range of Rs.11.00 - Rs.16.00 crore in FY2024-FY2026 against repayment obligations of Rs. 4.5-5 Cr. for the same period. The company maintains unencumbered cash and bank balance of Rs.1.20 crore as on March 31, 2023 The current ratio stood at 1.37 times as on March 31,2023. The average bank utilization of the company is approximately 68% for ten months period ended March, 2024. |
Outlook: Stable |
The Outlook is ‘Stable’ on account of improved operating performance and moderate financial risk profile of the company. The Outlook may be revised to 'Positive' in case of higher than expected growth in the revenue and overall operating & profitability margins. Conversely, the outlook may be revised to 'Negative' in case of slower than expected scale of operations or lower profitability or deterioration in RSDPL’s liquidity and financial risk profile. |
Other Factors affecting Rating |
None |
Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
Operating Income | Rs. Cr. | 48.05 | 20.35 |
PAT | Rs. Cr. | 6.02 | (3.73) |
PAT Margin | (%) | 12.52 | (18.33) |
Total Debt/Tangible Net Worth | Times | 1.37 | 1.22 |
PBDIT/Interest | Times | 2.35 | 0.76 |
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 • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.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. |
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