India Ratings Upgrades Capacit’e Infraprojects to ‘IND BBB’/Stable.


Capacit’e Infraprojects Limited (CIL), a fast-growing construction company providing end-to-end services for residential, commercial and Institutional building with presence in Mumbai Metropolitan Region (MMR), Pune, Chennai, National Capital Region (NCR), Varanasi, Kochi, Hyderabad and Bengaluru, announced that India Ratings and Research (Ind-Ra) has upgraded their Long-Term Issuer Rating to ‘IND BBB’ from ‘IND D’ and the outlook is Stable.

As per the rating agency the key rating drivers were:

Improved Operational Performance in 1HFY22: Despite the second wave, the company was able to register revenue of INR2.8 billion in 1QFY22 (1QFY21: INR0.2 billion) with EBITDA margin of 14.1%. The execution pace further picked up in 2QFY22 and CIL clocked close to INR3.4 billion in revenues with EBITDA margins improving to 17.8%. Ind-Ra estimates CIL to register a revenue of INR14 billion-15 billion with EBITDA margins in the range of 16%-17% in FY22. 

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Strong Execution Capabilities:CIL has successfully executed complex and large residential and real estate engineering, procurement and construction projects, backed by increased order inflows (FY16-FY20: revenue CAGR 15.7%). Since its inception, the company has evolved from constructing primarily residential real estate projects to commercial projects and has gradually forayed into hybrid projects for both government and private sector clients. CIL is now engaged in key projects which are of importance to the respective government such as CIDCO, MHADA project and some public sector hospital projects.

DSR Offers Second Line of Comfort : CIL created a DSR of INR73.5 million in October 2021 in the form of fixed deposits. The DSR is nearly equivalent to two months of term loan repayment obligations, providing an average monthly cover of 1.88x over 12 months ending October 2022.

Strong Revenue Visibility, but Highly Concentrated Order Book: At end-September 2021, CIL had an unexecuted order book of INR130 billion, providing strong revenue visibility of 8.56x of FY20 revenues (including the MHADA project), with public sector orders comprising 73.1% of the order book. However, the order book is highly concentrated in the MMR area, given that the region accounts for 92% of the total orders. Also, the top 10 projects of the company comprise around 93% of the total order book. CIDCO and MHADA projects contribute around 65.5% to the overall order book. Although Ind-Ra draws comfort from the project-specific funding tie-ups being in place, any delays/issues in the execution of these projects could hamper CIL’s revenue pickup and liquidity. This would remain a key rating monitorable for the agency.

Commenting on the upgrade, Mr. Rohit Katyal, Executive Director and CFO, Capacit’e Infraprojects, said, “We are delighted with the rating development which has happened in short span of time. The upgrade to ‘BBB’ revalidates our financial positioning and focus on balance sheet growth. Our focus now is strengthening the rating further in near future. Capacit’e Infraprojects’ leading position in the EPC sector is reflected in the positive ratings. Our solid order book, expansion plans, and efficiency demonstrate that we will continue to strengthen our market position.”

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