| Established track record of operations
ABIL has an established track record of over two decades. The company holds Grade "AA" registration with the Municipal Corporation of Greater Mumbai and Class 1(A) certification from the Public Works Department, Maharashtra. Further, the promoter Mr. Amit Bholanath Mishra has an experience spanning over two decades as an EPC contractor which has helped ABIL in increasing its scale of operations over the years and securing a healthy outstanding order book of Rs 846.75 Cr. as on April 20, 2025.
Healthy orderbook position expected to improve the operating performance over the medium term
While the revenues of the company stood lower at Rs 137.65 Cr. in 9MFY2025 as against Rs. 160.22 Cr. in 9MFY2024 due to delay in order executions in H1FY25 on account of General and Maharashtra state elections, however, the current outstanding orderbook of Rs 846.75 Cr. as on April 20, 2025 provides a sound and improving revenue visibility over the medium term. Further, of the outstanding order book nearly Rs 500 Cr. pertains to fresh orders received in FY25. Moreover, while in FY2024, the margins were higher at 13.08% on account of receipt of an urgent order of ~Rs. 50 Cr, executed in the monsoon season, which had led to a significant increase in the revenue as well as the margins, however, going forward the margins are expected to remain in the steady range of 10-11 percent.
Therefore, the continued growth in order book, timely execution of contracts at steady margins shall be a key rating sensitivity.
Healthy financial risk profile and strong resource mobilization ability
The financial risk profile of ABIL is healthy, supported by healthy networth, low gearing and comfortable debt protection metrics. The improving tangible net worth which increased to Rs. 81.55 Cr. on March 31, 2024 as against Rs. 35.32 Cr. on March 31, 2023 on account of equity raise and profit accretion has kept the gearing below unity for the past 2 years (0.50 times on March 31, 2024 & 0.91 times on March 31, 2023). The debt protection metrics also stood comfortable with Interest Coverage Ratio (ICR) at 4.66 times and Debt Service Coverage Ratio (DSCR) at 3.00 times in FY2024, improved from 3.47 times and 2.40 times respectively in FY2023. Moreover, while the Debt-EBITDA has remained comfortable in the past two years (1.69 times as on FY2024 & 2.09 times as on FY2023), any significant increase in the working capital requirements leading to moderation of the same, shall be a key rating sensitivity.
Further, the company also has strong resource mobilization ability as witnessed by equity raise through preferential and rights issues of Rs. 46.84 Cr. in FY2024 & FY2025 and the recent rights issue raise of Rs 39.92 Cr. in April 2025 which shall further improve the net worth and debt protection metrics of the company. Further, the company also enhanced its working capital limits by Rs 88.78 Cr. (Rs 42.50 Cr. – fund based & Rs 46.28 Cr. – non fund based) in FY2025 to support the growth in order book.
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| Intensive Working Capital Management
The Gross Current Assets (GCA) days of the company though improved, continue to remain intensive at 203 days on March 31, 2024 (325 days on March 31, 2023). This is mainly due to high unbilled revenue which stood at Rs. 50.51 Cr. as on March 31, 2024 (Rs 52.74 Cr. as on March 31, 2023) and retention money which are held upto 5 yrs. Moreover, the debtor days stood improved at 42 days on March 31, 2024 against 96 days on March 31, 2023. On the other hand, creditor days stood at 44 days on March 31, 2024 as against 144 days on March 2023.
The working capital cycle is expected to remain on similar lines on account of the nature of business operations.
Tender based nature of operations and competitive industry
ABIL is engaged in bidding for tenders in the infrastructure segment, which is marked by the presence of several mid- to large-sized players; hence, the company faces intense competition from other players in the sector. The risk becomes more pronounced as tendering is based on a minimum amount of bidding for contracts. The company acquires tenders at competitive prices, which may affect its profitability. There are uncertainties attached to the allotment of tenders. However, the risk is mitigated to some extent, given the promoter's experience of more than two decades in the industry, which has enabled the company to procure tenders on a regular basis.
Geographical concentration in revenue profile
ABIL majorly executes work orders in and near the city of Mumbai with more than 85 percent of the FY2024 revenue being derived through execution of projects in the city. Further, nearly 63% of the current outstanding order book is towards government sector projects of which ~ 61% pertains to railway developments. Therefore, there exists significant concentration risk in terms of railway sector and Mumbai location and any change in the state policy or sector regulations might affect the business operations of the company. Moreover, the company is exploring to diversify its operations into road projects in Gujarat & Uttar Pradesh and private residential projects.
Acuité believes that the ability of ABIL to diversify its revenue profile will remain key monitorable over the medium term.
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