­Long standing experience of the promoters in the industry
The promoters, Mr. Jai Prakash Singh and Mr. Anand Kumar Singh, bring over four decades of industry experience, which has enabled the company to build strong supplier and customer relationships and establish an extensive distribution network. SPIL now has a presence across 18 states, including recent expansion into Jammu & Kashmir and Chhattisgarh, with strong performance in West Bengal, Odisha, Uttar Pradesh, Maharashtra, Telangana, and Karnataka. Acuite derives comfort from the long experience of the management and believes this will benefit the company going forward, resulting in increase in the scale of operations.

Increase in scale of operations
SPIL reported an operating income of Rs. 242.44 crore in FY 2025 as against Rs. 223.67 crore in FY 2024. The increase in operating income was because of growth in volume sales along with price realizations. Further, the company has achieved revenues of around Rs.120.43 Cr. in H1FY26 as against Rs. 108.28 Cr. in H1FY2025. Growth in sales volume was driven by commissioning of new machines during FY25 and FY26.

The EBITDA margin increased to 8.86 percent in FY2025 as against 8.47 percent in FY2024 due to marginal decline in raw material prices and automated machineries improving overall operational efficiencies. The PAT margin stood at 2.85 percent in FY25 as against 2.72 percent in FY24. The EBDITA margin and PAT margins stood at 9.20 per cent and 3.14 per cent respectively in H1FY26.  Acuite believes that the scale of operations will improve over the medium term with augmentation of expanded capacities.

Healthy Financial Risk Profile
The financial risk profile of the company is healthy marked by improving net worth, gearing below unity and moderate debt protection metrics. The tangible net worth of the company stood at Rs.124.93 Cr. in FY2025 as against Rs. 96.17 Cr. in FY2024 due to infusion of IPO proceeds of Rs.22.08 Cr. and accretion of reserves. The gearing stood comfortable at 0.51 times in FY25 as against 0.57 times in FY24. The debt protection metrics stood moderate marked by Interest coverage ratio (ICR) of 2.15 times and debt service coverage ratio (DSCR) of 1.43 times for FY2025. Acuite believes that the financial risk profile will remain healthy over the medium term supported by comfortable capital structure and absence of debt funded capex plan.

­Intensive Working Capital Cycle
The working capital cycle remains intensive as evident from gross current assets (GCA) of 345 days for FY2025 as against 306 days for FY2024. The debtor days stood at 78 days in FY25 as against 66 days in FY2024. The credit terms vary with terms and relationship with dealers but generally it is around 60-90 days. Inventory days stood at 274 days in FY2025 as against 248 days in FY2024 due to 3–5 months lead time for imported raw materials, the company maintains 6–8 months of inventory. The creditor days stood at 158 days in FY2025 as against 152 days in FY24.  Most of the suppliers of the company provides a credit of 180 to 270 days backed by letter of credit. Acuite believes that the working capital operations of the company will remain at the similar levels over the medium term.

Fragmented nature of the industry
The industry is highly fragmented and unorganized in nature thereby putting pressure on the profitability margins of the companies engaged in the industry. Furthermore, due to low entry barriers, the competition gets intensified, which put pressure on profitability of the existing as well as new players. Accordingly, the margins of the company may fluctuate, depending upon price movement and level of competition.