CARE Ratings Raises Omaxe’s Real Estate Developer Credit Rating

Care Rating professional Risk opinion

Omaxe, a developer of real estate, has been given a limited credit rating of CARE BBB-/Stable, an upgrade from the secure outlook of CARE BB.

Omaxe reduced its debt from Rs 1400 crores to Rs 850 crores as of March 31, 2022, by repaying lenders an aggregate Rs 550 crore as principal costs.

However, the issuance of NCDs of Rs. 440 crores (of which Rs. 340 crores are raised until Jun. 30, 2022) obtained from Varde Partners has increased the debt stage in Q1FY23.

The company has a strong business channel and excellent cash flow visibility for the short-to-midterm period, thus the credit rating upgrading is timely.

It indicates the management’s desire to advance in restoring the company’s fundamental value and to fortify the balance sheet, according to Omaxe Limited’s Finance Director Atul Banshal.

How Omaxe Limited Aims To Revise The Growth In Upcoming Years?

By partnering and forming ties with major financial institutions across the board, Limited will aim to further optimise its debt profile.

The company Omaxe Limited’s rankings were revised in light of the strong sales and collection growth it saw in financial year 22 (the period from April 2022 to June 30 2022), which improved the company’s cash position.

The rankings, however, continue to be susceptible to execution and saleability risk for ongoing initiatives, including new launches, high borrowing costs, continued net losses in financial year 2021 and financial year 2022, high debt repayment in financial year 2022 and financial year 2023, offset by adequate liquidity buffers and undrawn debt, inherent risk related to the real estate sector, cyclicality and seasonality related to the real estate industry, and exposure to local demand-supply dynamics.

What Are The Major Reasons For Real Estate Market Growth?

Omaxe Group’s financial danger profile is characterised by a low debt position and comfortable gearing. In FY22, the company’s revenue was Rs. 1912 crore, compared to Rs. 1295 crore in FY21. Additionally, the company has collected Rs 450 crore over the past three months ending June 30, 2022, with an average monthly collection of Rs. 150 crores.

India’s real estate market is showing signs of healthy growth in 2022. Residential real estate has rebounded thanks in part to the pandemic, and the renovation was fantastic. The recovery is thought to have occurred as a result of people working from home. Over the previous year, people have spent more money on bigger and higher properties as a result of salary increases.

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