Rationale

The ratings assigned to the bank facilities of Experion Developers Private Limited (EDPL) factors in the expected growth in the EDPL’s sales and collections in FY2025, driven by good sales velocity in its ongoing and completed projects along with strong launch pipeline and healthy end-user demand. Consequently, the cashflow from operations are expected to remain adequate with comfortable leverage and coverage indicators. The company is currently executing one plotted project ‘Experion Virsa’ at Amritsar with a total saleable area of around 1.7 million square feet (msf) and has unsold inventory of 0.8 msf of area as of December 2023. Moreover, there is a strong launch pipeline of ~4.6 msf in the next 12-18 months across 5 residential projects in Gurgaon and Noida providing medium term cash flow visibility. ICRA estimates the company’s sales to be at Rs 720-730 crore in FY2024 and further grow by about 40-45% in FY2025, while the collections are expected to be at Rs 870-890 crore in FY2024 and further grow by about 19-20% in FY2025. Despite increase in the external debt to Rs. 375 crores as of March 2024 (nil as of March 2023), the leverage and coverage indicators remain comfortable. EDPL’s leverage measured by External Debt/CFO is estimated to remain healthy in the range of around 1.3-1.5 times in FY2025. As of December 2023, the company had total unsold inventory of around ~1.8 msf (ongoing - 0.8 msf and completed – 1.0 msf). The company’s current unsold inventory is located at a favourable location in Gurgaon, i.e., near Dwarka Expressway. The rating continues to factor in the established track record of the EDPL in the real estate market in NCR region and it has delivered 6.7 msf of residential project and 0.3 msf of commercial real estate projects till date totalling around ~7.0 msf. The company is a part of AT Group which is based out of Singapore and the group has asset portfolio across various sectors including real estate, renewable energy, private and structured credit and provides venture capital investments. The rating is, however, constrained by the execution and market risk for the commercial project acquired from Dignity Buildcon Private Limited through NCLT. The acquisition cost of Rs 450 crores has been funded by Rs 75 crore of promoter funds and Rs 375 crores of term loan which has a bullet repayment in FY2027 and FY2028. The loan is expected to be repaid from the liquidation of Rs. 1198 crore of ready to move-in inventory in the residential segment. ICRA notes that the YTS for the readyto-move inventory on a trailing twelve months (TTM) basis is 1.5-2 years, thereby mitigating the refinancing risk to an extent. Timely liquidation of which will be important from the credit perspective. ICRA notes that currently there is no pre-leasing for the commercial project and a construction cost of Rs. 200 crore is pending to be incurred. The rating also considers the execution and market risk for the ongoing residential project with saleable area of 1.7 msf and future residential project pipeline of ~4.6 msf of saleable area. The company’s portfolio is also exposed to geographical concentration risk as majority of the projects are in Delhi NCR region. Moreover, being a cyclical industry, the real estate sector is highly dependent on macroeconomic factors, which exposes the company’s sales to any downturn in demand. The stable outlook on the long-term rating reflects ICRA’s expectations that the company will receive adequate collections from its ongoing projects as well as new launches while maintaining comfortable debt protection metrics.