Press Release: Refer Annexure For Details
Press Release: Refer Annexure For Details
Press Release: Refer Annexure For Details
Acuité has upgraded its long term rating to ACUITE A- (read as ACUITE A minus) from ACUITE BBB+
(read as ACUITE triple B plus) and short term rating to ACUITE A2+ (read as ACUITE A two plus) from
ACUITE A2 (read as ACUITE A two) on the bank facilities of Rs.327.72 Cr. of YFC Projects Private
Limited (YPPL). The outlook is ‘Stable’.
Further, Acuité has assigned long term rating of ACUITE A- (read as ACUITE A minus) and short
term rating of ACUITE A2+ (read as ACUITE A two plus) to the Rs.100.74 crore bank facilities of YPPL.
The outlook is ‘Stable’.
The upgrade is driven by steady growth in revenue, profitability and net cash accruals. The
operating income of the company grew at a CAGR of 30 percent over the last five years from
FY2014 to FY2018 while maintaining operating margins at around 9-10 percent as a result the
company has generated healthy cash accruals of Rs.107.17 crore on a cumulative basis over the
same period. The cash accruals are expected to improve over the medium term on the back of
its order book of Rs.1600 crore which is to be executed over the next 18 months period. Return on
Capital Employed has been healthy at 25.58 percent in FY2018 (Provisional) and is expected to
improve to ~30 percent. Acuité also factors the expected improvement in debt protection metrics
of the company on account of decline in debt servicing obligations vis-à-vis the operating cash
flows of the company over the next 18 to 24 months.
Outlook: Stable
Acuité believes that YPPL will maintain a ‘Stable’ financial risk profile over the medium term
backed by its experienced management, healthy revenue visibility and comfortable debt
protection metrics. The outlook may be revised to ‘Positive’ in case of higher-than-expected
growth in operating income while maintaining its profitability margins. The outlook may be revised
to ‘Negative’ in case of increased deterioration in liquidity position of the company most likely as
a result of substantial increase in receivable collection period or in case of higher-than-expected
leverage indicators.
Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited) www.acuite.in
Analytical Approach
Acuité has taken a standalone view of the financial and business risk profile of YPPL.
Strengths
Although, risk associated with delayed payment exists in the industry, with promoters’ extensive
experience and established track record, YPPL has managed to collect payments within 45-65
days. The company generates bills on a monthly basis and receives payment within a period of
45 days from the date of approval of the bill. The company only undertakes projects funded by
Multilateral Development Institutions (MDIs) and Central Government of India. This further ensures
that the counterparty risk is minimised and receivables are realised in a timely manner.
YPPL has also entered into joint ventures with several international players to bid for large
mandate tenders. Acuité believes that YPPL will benefit from its established relationship with such
players by leveraging their technical prowess and financial position while contesting such
tenders.
Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited) www.acuite.in
• Moderate financial risk profile and comfortable liquidity
YPPL has moderate financial risk profile marked by moderate net worth, low gearing and healthy
debt protection measures. YPPL’s net worth is estimated to be moderate at around Rs.85.26
crore as on March 31, 2018 (Provisional). The net worth has improved significantly from Rs.47.77
crore as on March 31, 2015 on account of healthy accretion to reserves. Acuité believes that
the net worth of the company will remain in the range of Rs.115.00 crore to Rs.194.00 crore over
the medium term backed by its healthy revenue growth and stable operating margins.
The leverage and coverage ratios continue to remain healthy. The gearing remained low at
0.74 times as on March 31, 2018 (Provisional) against 0.89 times as on March 31, 2017. The
moderate profitability coupled with low gearing levels has resulted in healthy debt protection
metrics, with interest coverage of 3.95 times and NCA/TD of 0.40 times. The TOL/TNW ratio
however is estimated to be high at around 3.12 times as on March 31, 2018 (Provisional) on
account of high mobilisation advances and trade payables. In FY2018, YPPL generated net cash
accruals of Rs.25.41 crore as against debt repayment obligation of Rs.10.62 crore. The net cash
accruals are expected to improve to ~Rs.53.00 crore over the medium term on account of
absence of any major debt funded capex.
Acuité believes that the debt protection metrics will remain healthy on account of healthy
revenue visibility and stable operating margins over the medium term.
Weaknesses
Applicable Criteria
• Default Recognition - https://www.acuite.in/criteria-default.htm
• Financial Ratios And Adjustments - https://www.acuite.in/view-rating-criteria-20.htm
• Entities in Infrastructure Sector - https://www.acuite.in/view-rating-criteria-14.htm
Contacts
Analytical Rating Desk
Suman Chowdhury Varsha Bist
President - Rating Operations Manager - Rating Desk
Tel: 022-67141107 Tel: 022-67141160
[email protected] [email protected]
Manmitha Sodhi
Analyst - Rating Operations
Tel: 022- 67141133
[email protected]
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. Acuité ratings 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. Acuité ratings 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.
Acuité Ratings & Research Limited (erstwhile SMERA Ratings Limited) www.acuite.in