The agency has also affirmed the short rating on the said instruments at “CARE A1+”.
CARE Ratings said that the revision in the rating assigned to the bank facilities and instruments of G R Infraprojects (GRIL) takes into consideration the increase in the pool of operational assets combined with expected upliftment in its financial flexibility post transfer of its seven operational assets into Bharat Highways InvIT in FY24.
The benefits are also likely to accrue by virtue of receipt of around Rs.2000 crore equivalent underlying InVIT units, while unlocking of capital via InvIT platform shall aid GRIL in funding its future growth capex.
Alternatively, in case if InvIT does not fructify GRIL also has flexibility to upstream surplus cash of operational special purpose vehicles (SPVs) or explore monetization of operational HAM assets.
The rating revision also factors healthy order inflow during last six months in diverse segment augmenting GRIL's revenue visibility.
The ratings continue to factor in the robust operational performance of the company led by healthy capital structure, low leverage, strong liquidity position and healthy compounded annual growth rate (CAGR) of 13% in its total operating income (TOI) for the past five years ended March 31, 2023. While TOI is expected to remain at similar levels of FY23 yet, CARE Ratings expects it to rise at healthy rate of 12-15% in FY25 largely attributed to receipt of appointed date for its HAM projects secured in FY23.
Profit before interest lease depreciation and taxes (PBILDT) margins though moderated due to surge in commodity prices and intense competition in the roads sector, it is expected to remain comfortable around 15-16% in the medium term.
The ratings are ably supported by GRIL's ownership of sizeable equipment fleet with low reliance on sub-contracting as well as established track record in execution capability and experienced management.
The above rating strengths, however, continue to be tempered by GRIL's working capital intensive operations, exposure to build operate-transfer (BOT) projects and limited segmental revenue diversification exposing it to intense competition within the road sector.
G R Infraprojects is engaged in road construction in various states across the country with large part of its present order book being from NHAI and MoRTH. In addition to construction of roads on engineering, procurement and construction (EPC) basis, GRIL also undertakes construction of road projects on BOT basis. GRIL owns three emulsion manufacturing plants having an aggregate installed capacity of 84,960 MTPA at Udaipur, Lucknow and Assam. It also has in-house fabrication and galvanising unit (24,000 MT) as well as pole manufacturing unit. The company has a repair and maintenance workshop at Udaipur.
On a consolidated basis, GRIL has reported total operating income of Rs.9,549 crore and profit after tax of Rs.1,454 crore during FY23.
The scrip rose 0.73% to currently trade at Rs 1275.50 on the BSE.
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