CRISIL said that the upgrade factors in strengthening of the group’s credit risk profile post the initial public offer (IPO) during March 2024.
The group has a top line of Rs 4,875 crore for fiscal 2023 with operating profitability of over 4.6%. The group reported revenue of Rs 2,850 crore for the first half of fiscal 2024 with earnings before interest, taxes, depreciation, and amortisation (EBITDA) of 4.6%.
Fresh equity of about Rs 250 crore raised through the IPO would be used to reduce debt of around Rs 192 crore and the rest would be used for general corporate purposes and kept as additional liquidity. This would strengthen the financial profile of the group. With lower debt, debt protection metrics and liquidity will also see an improvement in this fiscal.
The ratings reflect the group's established market position and healthy relationship with key suppliers in the automobile (auto) dealership business and healthy financial risk profile. These strengths are partially offset by geographical concentration, exposure to intense competition and susceptibility to cyclicality in the auto industry.
Popular Vehicles and Services is the one of the largest authorised dealerships for Maruti Suzuki India Ltd (MSIL) vehicles in India. Its subsidiaries and step down subsidiaries are in the dealership business of Honda Cars India, Jaguar Land Rover India Ltd, Tata Motors Ltd (Commercial Vehicles) and Daimler India Commercial Vehicles (Bharat Benz) among others.