Press Release

Press Release

October 24, 2025

SELECT CARS
Rating Assigned and Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	22.00	ACUITE BBB \| Stable \| Assigned	-
Bank Loan Ratings	86.00	ACUITE BBB \| Stable \| Reaffirmed	-
Total Outstanding	108.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

Acuité has reaffirmed the long-term rating of ‘ACUITÉ BBB' (read as ACUITÉ triple B) on Rs. 86.00 Cr. bank facilities of Select Cars. The outlook is 'Stable'.
Acuité has assigned the long-term rating of ‘ACUITÉ BBB' (read as ACUITÉ triple B) on Rs. 22.00 Cr. bank facilities of Select Cars. The outlook is 'Stable'.

Rationale for rating recommendation
The rating factors slight decline in the scale of operations, moderate financial risk profile and efficient working capital operations. The rating also factors slight moderation in EBITDA margins of the firm. The margins have moderated because of the additional discount given to customers to retain the market share and compete with other dealers. The rating is partially constrained by inherent thin margins in auto dealership business due to limited bargaining power, risk of capital withdrawal in partnership firms and highly competitive nature of automobile dealer business. The rating draws comfort from the experienced management and established market position in its area if operations. Furthermore, the financial risk profile remains moderate with comfortable capital structure and debt protection metrics and efficient working capital management.

About the Company

Select Cars (SC) is partnership firm incorporated in 2019, is an authorized dealer of Tata motors ltd. SC was incorporated by acquiring Concorde motors, a direct subsidiary of Tata Motors ltd. In 2019, SC started its operations with two showrooms in Hyderabad and later added another three showrooms within the Hyderabad city. SC now has total five showrooms located at Begumpet, Alkapur, Chandanagar, Karmanghat & Bachupally and four service centers located at Uppal, Miyapur, Y. Junction & L. B. Nagar. SC generates revenue through sale and service of Tata motors vehicles, firm is also into sale of spare parts for service purpose.

Unsupported Rating

Not Applicable

Analytical Approach

Acuite has considered a standalone approach to the business and the financial profile of Select Cars (SC) to arrive at the rating.

Key Rating Drivers

Strengths

Established market position and long track record of operations
Select Cars (SC) is partnership firm established in 2019, is an authorized dealer of Tata motors ltd. Firm is managed by partners Mr. M.Vijay Kumar Reddy, Mr. A Rama Mohana Rao and Mr. S. Vijay Bhaskar Raju and Mr. A. Raju. In 2019, SC started its operations with two showrooms in Hyderabad and later added another three showrooms within the Hyderabad city. SC now has total five showrooms located at Begumpet, Alkapur, Chandanagar, Karmanghat and Bachupally and four service centres located at Uppal, Miyapur, Y. Junction & L. B. Nagar. SC. SC generates revenue through sale and service of Tata motors vehicles, firm is also into sale of spare parts for service purpose. Acuité believes that SC will continue to benefit from extensive experience of its partners and established track record of operations in near to medium term.
Moderate financial risk profile
The financial risk profile of the firm is moderate marked by net-worth of Rs. 52.67 Cr. as on 31^st March 2025 (Prov.) as against Rs. 46.65 Cr. as on 31st March 2024. The total debt of the firm is Rs. 59.87 Cr. in FY25(Prov.) as against Rs. 65.16 Cr. in FY24 which has led to an improvement in the gearing standing at 1.14 times in FY25(Prov.) as against 1.40 times in FY24. Further, the interest coverage ratio of the firm stood at 3.57 times as on 31^st March 2025 (Prov.) as against 3.83 times as on 31st March 2024. The debt service coverage ratio stood at 2.90 times as on 31^st March 2025 (Prov.) as against 3.66 times as on 31st March 2024. The decline has been noticed because of the increase in the interest payments attributed to the increased working capital limits from the vendor financing instruments proposed by the banks Acuite believes that financial risk profile of the firm is likely to stay on the same lines in the medium term.
Efficient working capital management
The working capital operations of the firm remained moderate marked by GCA days which stood at 52 days as on 31^st March 2025 (Prov.) as against 59 days as on as on 31st March 2024. The improvement was noticed because of decrease in inventory. The inventory of the firm stood at 33 days as on 31^st March 2025 (Prov.) as against 43 days on 31st March 2024. The decrease was noticed as the management kept the inventory with respect to their expected sales. The debtor days of the firm stood at 10 days as on 31^st March 2025 (Prov.) as against 11 days on 31st March 2024. On the other hand, the creditor days of the firm stood same at 1 day as on 31^st March 2025 (Prov.) as against 1 day as on 31st March 2024. Acuite believes that working capital operations of the firm is likely to remain moderate due to nature of operations of the firm and long-standing relations of the firm with the creditors.

Weaknesses

Thin profitability margins inherent in auto dealership business
The firm's operating margins remained thin at 2.40% in FY25(Prov.) against 3.33% in FY24. Lower operating margins are attributable to the inherent nature of auto dealership business and lower bargaining power of the dealer. Furthermore, in FY25, the firm provided additional discounts to retain its market position share. Acuité believes that profitability margins will continue to remain thin going forward considering the nature of business.

Exposure to intense industry competition
The passenger car industry in India is highly competitive. Being an authorized dealer for Tata Motors Limited (TML), the firm must compete with dealers of other car brands such as Maruti Suzuki, Hyundai, Mahendra & Mahendra etc. Auto manufacturers also encourage more dealerships (thereby increasing competition among dealers) to improve market penetration and sales. Thus, the business risk profile may continue to be constrained by limited bargaining power with principals, and exposure to intense competition.

Rating Sensitivities

Movement in scale of operations and margins.
Movement in working capital requirement.
Movement in capital structure.

Liquidity Position

Adequate

The liquidity profile of the firm is adequate. The firm has generated net cash accruals of Rs. 13.44 Cr. as on 31st March 2025(Prov.) against Rs. 1.20 Cr. debt repayment obligation in the same period. The average bank limit utilisation of the firm at the month end stood low at 1% in the last 6 months ending August 2025, however the average maximum utilization of the bank limits during the month stood comfortable at 58.10% in last 6 months ending August 2025. The current ratio stands at 1.28 times as on 31st March 2025(Prov.) against 1.28 times as on 31st March 2024. The cash and bank balance of the firm stood at Rs. 7.13 Cr. as on 31st March 2025(Prov.). However, going forward Acuite believes that the firm is likely to maintain adequate liquidity position on account of steady accruals.

Outlook : Stable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 25 (Provisional)	FY 24 (Actual)
Operating Income	Rs. Cr.	640.46	647.78
PAT	Rs. Cr.	12.09	16.53
PAT Margin	(%)	1.89	2.55
Total Debt/Tangible Net Worth	Times	1.14	1.40
PBDIT/Interest	Times	3.57	3.83

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
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm
• Trading Entities: https://www.acuite.in/view-rating-criteria-61.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.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
05 Feb 2025	Channel/Dealer/Vendor Financing	Long Term	15.00	ACUITE BBB \| Stable (Reaffirmed)
	Channel/Dealer/Vendor Financing	Long Term	15.00	ACUITE BBB \| Stable (Reaffirmed)
	Channel/Dealer/Vendor Financing	Long Term	5.00	ACUITE BBB \| Stable (Reaffirmed)
	Channel/Dealer/Vendor Financing	Long Term	15.00	ACUITE BBB \| Stable (Reaffirmed)
	Channel/Dealer/Vendor Financing	Long Term	5.00	ACUITE BBB \| Stable (Reaffirmed)
	Channel/Dealer/Vendor Financing	Long Term	18.00	ACUITE BBB \| Stable (Reaffirmed)
	Channel/Dealer/Vendor Financing	Long Term	8.00	ACUITE BBB \| Stable (Reaffirmed)
	Channel/Dealer/Vendor Financing	Long Term	5.00	ACUITE BBB \| Stable (Reaffirmed)
08 Nov 2023	Channel/Dealer/Vendor Financing	Long Term	15.00	ACUITE BBB \| Stable (Assigned)
	Channel/Dealer/Vendor Financing	Long Term	15.00	ACUITE BBB \| Stable (Assigned)
	Channel/Dealer/Vendor Financing	Long Term	5.00	ACUITE BBB \| Stable (Assigned)
	Channel/Dealer/Vendor Financing	Long Term	15.00	ACUITE BBB \| Stable (Assigned)
	Channel/Dealer/Vendor Financing	Long Term	5.00	ACUITE BBB \| Stable (Assigned)
	Channel/Dealer/Vendor Financing	Long Term	18.00	ACUITE BBB \| Stable (Assigned)
	Channel/Dealer/Vendor Financing	Long Term	8.00	ACUITE BBB \| Stable (Assigned)
	Channel/Dealer/Vendor Financing	Long Term	5.00	ACUITE BBB \| Stable (Assigned)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Bank Of Baroda	Not avl. / Not appl.	Channel/Dealer/Vendor Financing	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	15.00	Simple	ACUITE BBB \| Stable \| Reaffirmed
H D F C Bank Limited	Not avl. / Not appl.	Channel/Dealer/Vendor Financing	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	15.00	Simple	ACUITE BBB \| Stable \| Reaffirmed
ICICI BANK LIMITED	Not avl. / Not appl.	Channel/Dealer/Vendor Financing	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	25.00	Simple	ACUITE BBB \| Stable \| Reaffirmed
INDUSIND BANK LIMITED	Not avl. / Not appl.	Channel/Dealer/Vendor Financing	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	10.00	Simple	ACUITE BBB \| Stable \| Reaffirmed
State Bank of India	Not avl. / Not appl.	Channel/Dealer/Vendor Financing	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	18.00	Simple	ACUITE BBB \| Stable \| Reaffirmed
AXIS BANK LIMITED	Not avl. / Not appl.	Channel/Dealer/Vendor Financing	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	3.00	Simple	ACUITE BBB \| Stable \| Reaffirmed
State Bank of India	Not avl. / Not appl.	Channel/Dealer/Vendor Financing	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	20.00	Simple	ACUITE BBB \| Stable \| Assigned
AXIS BANK LIMITED	Not avl. / Not appl.	Channel/Dealer/Vendor Financing	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	2.00	Simple	ACUITE BBB \| Stable \| Assigned

Contacts

Mohit Jain
Chief Analytical Officer - Rating Operations

Shubham Jain
Associate Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.

Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.