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Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
Bank Loan Ratings | 35.68 | ACUITE BB+ | Stable | Upgraded | - |
Total Outstanding | 35.68 | - | - |
Rating Rationale |
Acuité has upgraded the long-term rating to 'ACUITE BB+' (read as ACUITE double B plus) from 'ACUITE BB' (read as ACUITE double B) on the Rs. 35.68 crore bank facilities of Sree Educational Society (SES). The outlook is ‘Stable’. |
About the Company |
Established in 1997, Hyderabad based, Sree Educational Society (SES) is engaged in the activity of running engineering and Masters of Business Administration (MBA) programs under ‘Sreenidhi Institute of Science & Technology’ (SIST). It was affiliated to the Jawaharlal Nehru Technological University, Hyderabad (JNTUH) till 2009. From 2010, the institution had attained autonomous status. SIST campus is spread across 33 acres, located in Yanampet of Ghatkesar Mandal in Rangareddy district of Telangana. The society is promoted by Dr. K. Pruthvipathi Rao, Dr. K. Lakshmi Devi, Mr. K. T. Mahi, Mrs. Vala Prasanna, Mrs. K. Saritha, Mr. K. Abhijeet Rao, Mr. K. Jivv Vickram Rao. |
Unsupported Rating |
Not Applicable |
Analytical Approach |
Acuité has considered the standalone business and financial risk profile of SES to arrive at the rating. |
Key Rating Drivers |
Strengths |
Established track record and range of courses offered in the university SES has been in existence for more than two decades offering a range of courses for undergraduate and post graduate students in the fields of Science and Management. The President of the society, Mr. Prithvi Pathi Rao, who is a doctor by profession and Secretary Mr. K. T. Mahi possess more than two decades of experience in the educational administration. The day to day operations are managed by Mr. Narashima Reddy (Executive Director) and Mr. Ch Shiva Reddy (Principal) who possess vast experience in the educational industry. It is engaged in the activity of running engineering and Masters of Business Administration (MBA) programs. Acuité believes that the society will continue to benefit from the experienced management and established track record of operations. Healthy financial risk profile The financial risk profile of the society is marked by healthy net worth, moderate gearing, and comfortable debt protection metrics. The net worth of the society stood healthy at Rs. 50.86 crore in FY2024 (Prov.) and Rs. 38.01 crore in FY2023 as compared to Rs. 25.19 crore in FY2022 due to accretion to reserves. The gearing of the society stood moderate at below unity levels 0.62 times and 0.72 times in FY2024 (Prov.) and FY2023 respectively. Interest coverage ratio (ICR) has improved to 8.03 times in FY2024 (Prov.) and 9.20 times in FY2023 as compared to 3.47 times in FY2022. The debt service coverage ratio (DSCR) of the society also improved to 5.18 times in FY2024 (Prov.) and 5.64 times in FY2023 as compared to 2.52 times in FY2022. Acuité believes that the financial risk profile of the society will continue to remain healthy at the back of healthy accruals leading to comfortable capital structure and comfortable debt protections metrics over the medium term. |
Weaknesses |
Working capital intensive nature of operations |
Rating Sensitivities |
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Liquidity Position |
Adequate |
The society’s liquidity position is adequate, marked by steady net cash accruals of Rs. 20.20 crore in FY2024 (Prov.) as against a long-term debt repayment of only Rs. 1.58 crore over the same period. The unencumbered cash and bank balances stood at Rs. 0.77 crore as on March 31st 2024. However, the current ratio stood low at 1.14 times in FY2024 (Prov.) and 0.96 times in FY2023 as compared to 0.79 times in FY2022. Additionally, the fund-based limit utilized ~ 98 percent for the six months ended April 2024. However, the working capital intensive nature of operations is marked by high GCA days of 274 days in FY2024 (Prov.) and 261 days in FY2023 as compared to 228 days in FY2022. Acuité believes that going forward the liquidity position of the company will improve due to gradually improving cash accruals. |
Outlook: Stable |
Acuité believes that the society will maintain a ‘Stable’ outlook over the medium term on account of the established track record of the society and experienced professionals as trustees. The outlook may be revised to ‘Positive’ if the society achieves substantial improvement in its gearing. Conversely, the outlook may be revised to 'Negative' in case of a steep decline in revenues and profitability leading to deterioration in liquidity. |
Other Factors affecting Rating |
None |
Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
Operating Income | Rs. Cr. | 112.35 | 108.65 |
PAT | Rs. Cr. | 12.85 | 12.82 |
PAT Margin | (%) | 11.44 | 11.80 |
Total Debt/Tangible Net Worth | Times | 0.62 | 0.72 |
PBDIT/Interest | Times | 8.03 | 9.20 |
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 or more details. please refer Rating Criteria "Complexity Level Of Financial Instruments" on www.acuite.in. |
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