January 19, 2024

Intertouch Metal Buildings Private Limited: Long-term rating upgraded to [ICRA]BB+

(Stable); short-term rating reaffirmed
Summary of rating action

Previous Rated Amount Current Rated Amount

Instrument* Rating Action
(Rs. crore) (Rs. crore)
Long-term – Fund-based – Cash [ICRA]BB+ (Stable); upgraded from
8.01 8.01
credit [ICRA]BB (Stable)
[ICRA]BB+ (Stable)/[ICRA]A4+; long
Long-term/ Short-term – Non- term rating upgraded from [ICRA]BB
29.99 29.99
fund based (Stable) and short-term rating
reaffirmed
Total 38.00 38.00
*Instrument details are provided in Annexure-I

Rationale

The rating action for Intertouch Metal Buildings Private Limited (IMBPL) factors in the expected improvement in revenue and
operating profits in FY2024, backed by healthy order inflows and execution resulting in improvement in debt coverage metrics.
The company achieved revenues of around Rs. 113 crore in 9M FY2024 and is estimated to report revenues of Rs. 125-130
crore in FY2024 (PY: ~Rs. 81 crore) with operating margins of 8%, similar to FY2023 levels. This is anticipated to result in
improved debt coverage metrics with interest coverage of 3.1 times (PY: 2.2 times) as of March 2024, which are likely to sustain
in the medium term. The rating favourably factors in the expected healthy order inflow in FY2024 as demonstrated by new
orders of Rs. 59.1 crore in 7M FY2024 and pending order book of Rs. 103 crore as on November 30, 2023, which is 1.3 times
of the operating income (OI) of FY2023, thereby providing revenue visibility. The ratings continue to positively note the
extensive experience of the promoters in civil engineering and their long association with renowned clients and suppliers,
thereby ensuring healthy growth prospects and favourable credit terms.

The ratings are, however, constrained by the company’s modest scale of operations and low net worth. Notwithstanding the
likely increase in revenues in FY2024 to Rs. 125-130 crore, the scale of operations are expected to remain modest in the
medium term. Further, the company’s net worth is low at Rs. 18 crore in FY2023. The ratings consider its moderate working
capital intensity with net working capital (NWC)/OI of 17.6% in FY2023 mainly owing to its high inventory levels, where it holds
inventory of raw materials such as steel, aluminum, etc, required for various orders. The ratings continue to factor in the
susceptibility of its profit margins to fluctuations in key raw material prices. Nevertheless, the presence of price escalation
clause in the contracts, mitigates the risk to an extent. Further, IMBPL operates in the steel roofing and PEB industry, which is
characterised by intense competition from both organised and unorganised entities on account of low entry barriers.

The Stable outlook reflects ICRA expectations that the company will benefit from its healthy order book position supporting
improvement in scale, adequate liquidity and extensive experience of the promoters in the industry.

Key rating drivers and their description

Credit strengths

Expected improvement in revenue and operating profits in FY2024; healthy order inflow to support order book position –
The company achieved revenues of around Rs. 113 crore in 9M FY2024, backed by healthy order inflows and execution. It is
estimated to report revenues of Rs. 125-130 crore in FY2024 (PY: ~Rs. 81 crore) with operating margins of 8% similar to FY2023
levels. This is expected to result in an improvement in the debt coverage metrics with interest coverage of 3.1 times (PY: 2.2

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 times) as of March 2024. Further, the company is projected to have healthy order inflow in FY2024 as demonstrated by new
orders of Rs. 59.1 crore in 7M FY2024 and pending order book of Rs. 103 crore as on November 30, 2023, which is 1.3 times
of the OI of FY2023, thereby providing revenue visibility.

Extensive experience of promoters in roofing business – IMBPL’s Managing Director, Mr. Niraj Malik, has extensive experience
of over two decades in civil engineering. The same has facilitated IMBPL to develop stable business operations and establish
good relationship with renowned clients and suppliers, thereby ensuring healthy growth prospects and favourable credit
terms. Besides, the promoters provide timely funding support to the company in the form of unsecured loans (Rs. 8.5 crore as
on March 31, 2023).

Credit challenges

Modest scale of operations and low net worth; profits vulnerable to raw material price volatility and intense competition –
Notwithstanding the estimated increase in OI in FY2024 to Rs. 125-130 crore, IMBPL’s scale of operations are expected to
remain modest in the medium term. Also, its net worth is low at Rs. 18 crore in FY2023. The company’s profit margins are
exposed to volatility in key raw material prices and it faces intense competition in the steel roofing and PEB industry.
Nevertheless, the presence of price escalation clause in the contracts mitigates the risk to an extent.

Moderate working capital intensity – The company’s NWC/OI stood moderate at 17.6% in FY2023 (PY: 24.7%) mainly owing
to its elevated inventory levels, where it holds inventory of raw materials such as steel, aluminium, etc, required for various
orders.

Liquidity position: Adequate

The company’s liquidity position is adequate, characterised by moderate utilisation of around 37% of its cash credit facility for
the last twelve months ending November 2023. Further, it had free cash and bank balance of Rs. 6.3 crore as on March 31,
2023. IMBPL has scheduled repayment obligations of Rs. 2.2 crore in FY2024, which can be serviced through its estimated cash
flow from operations.

Rating sensitivities

Positive factors – ICRA may upgrade IMBPL’s ratings if there is a significant increase in scale of operation and profitability levels
resulting in an improvement in debt protection metrics and liquidity position on a sustained basis.

Negative factors – Negative pressure on IMBPL’s ratings may arise in case of significant decline in scale of operations and
profitability or increase in working capital intensity weakening liquidity position and debt protection metrics on a sustained
basis. Specific credit metrics that may lead to a rating downgrade include interest coverage of below 2.5 times on a sustained
basis.

Analytical approach

Analytical Approach Comments

Applicable rating methodologies Corporate Credit Rating Methodology

Parent/Group support Not Applicable

Consolidation/Standalone Standalone

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 About the company

Intertouch Metal Buildings Private Limited, established in 1997 and incorporated in 2000, provides commercial construction
services and industrial building systems that include pre-engineered buildings (PEBs), metal roofing, wall claddings, façade
systems, latchways fall arrest systems and Kalzip aluminium roofing system among others. The company’s manufacturing
facility is in Ranipet, Tamil Nadu.

Key financial indicators (audited)

IMBPL FY2022 FY2023

Operating income 70.0 81.4
PAT 2.3 2.4
OPBDIT/OI 7.8% 7.8%
PAT/OI 3.2% 2.9%
Total outside liabilities/Tangible net worth (times) 2.7 2.8
Total debt/OPBDIT (times) 2.8 1.9
Interest coverage (times) 2.5 2.2
Source: Company, ICRA Research; All ratios as per ICRA’s calculations; Amount in Rs. crore
PAT: Profit after tax; OPBDIT: Operating profit before depreciation, interest, taxes and amortisation

Status of non-cooperation with previous CRA: Not applicable

Any other information: None

Rating history for past three years

Chronology of rating history

Current rating (FY2024)
for the past 3 years
Amount Date & Date & Date & Date & rating
outstanding as on rating in rating in rating in in FY2021
Instrument Amount
Mar 31, 2023 FY2024
Type rated FY2023 FY2022
(Rs. crore)
(Rs. crore) January 19, October 4, Aug 20, June 12, 2020
2024 2022 2021
Fund-based [ICRA]BB+ [ICRA]BB [ICRA]BB
1 Long-term 8.01 - [ICRA]BB (Stable)
Cash credit (Stable) (Stable) (Stable)
Long- [ICRA]BB+ [ICRA]BB [ICRA]BB
Non-fund based [ICRA]BB (Stable)/
2 term/Short 29.99 - (Stable)/ (Stable)/ (Stable)/
limits [ICRA]A4+
term [ICRA]A4+ [ICRA]A4+ [ICRA]A4+

Fund-based [ICRA]BB
2 Long-term - - - - [ICRA]BB (Stable)
Term loan (Stable)

Long- [ICRA]BB
[ICRA]BB (Stable)/
3 Interchangeable term/Short - - - - (Stable)/
[ICRA]A4+
term [ICRA]A4+
Long-
[ICRA]BB (Stable)/
5 Unallocated term/Short - - - - -
[ICRA]A4+
term

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 Complexity level of the rated instruments

Instrument Complexity Indicator

Long-term – Fund-based – Cash credit Simple
Long-term/ Short-term – Non-fund based Very Simple

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated.
It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's
credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or
complexity related to the structural, transactional or legal aspects. Details on the complexity levels of the instruments are
available on ICRA’s website: Click Here.

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 Annexure I: Instrument details

Instrument Coupon Amount Rated

ISIN Date of Issuance Maturity Current Rating and Outlook
Name Rate (Rs. crore)
Long-term –
NA Fund-based – - - - 8.01 [ICRA]BB+ (Stable)
Cash credit
NA Long-
term/Short-term [ICRA]BB+
- - - 29.99
– Non-fund (Stable)/[ICRA]A4+
based
Source: Company

Please click here to view details of lender-wise facilities rated by ICRA

Annexure II: List of entities considered for consolidated analysis: Not Applicable

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 ANALYST CONTACTS
Rajeshwar Burla Anupama Reddy
+91 40 4547 4829 +91 40 4547 4829
[email protected] [email protected]

Abhishek Lahoti Vishal R

+91 40 4547 4829 +91 80 4332 6419
[email protected] [email protected]

RELATIONSHIP CONTACT
L. Shivakumar
+91 22 6114 3406
[email protected]

MEDIA AND PUBLIC RELATIONS CONTACT

Ms. Naznin Prodhani
Tel: +91 124 4545 860
[email protected]

Helpline for business queries

+91-9354738909 (open Monday to Friday, from 9:30 am to 6 pm)

[email protected]

About ICRA Limited:

ICRA Limited was set up in 1991 by leading financial/investment institutions, commercial banks and financial services
companies as an independent and professional investment Information and Credit Rating Agency.

Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a Public Limited Company,
with its shares listed on the Bombay Stock Exchange and the National Stock Exchange. The international Credit Rating Agency
Moody’s Investors Service is ICRA’s largest shareholder.

For more information, visit www.icra.in

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