| Experienced promoters and established track record of operations
SECL was established as proprietary firm in 1989, thus having over three decades of operational track record in this line of business. The company is currently managed by Mr. Santhanam Seshadri and Mr. Rajagopal Sekar, who together brings over three decades of experience in civil construction industry. SECPL undertakes civil contracting works both public and private clients and has developed a strong expertise in executing works related to public water departments (PWD) in Tamil Nadu and primarily in Chennai city. SECPL's management is supported by an experienced professionals with the technical capability to execute diverse civil contract works. The extensive experience of promoters has helped the company establish long-term relationships with its customers and suppliers. Acuite believes that SECPL will continue to benefit from its experienced promotors and its long track record of operations over the medium term.
Improving scale of operations with healthy profitability:
SECL registered revenue of Rs.93.84 Cr. in FY2025, improved from Rs.76.93 Cr. registered in FY2024. In 11MFY2026, the company registered revenue of ~Rs.121Cr. compared to Rs.74.23 Cr. in the corresponding period of the previous year and is expected to close FY2026 with revenue of Rs.150-155 Cr. This growth in revenue is attributed to the increase in orders flow primarily in sewerage treatment segment. As on December 31, 2025, the company has an unexecuted order book of Rs.379.05 Cr. providing healthy revenue visibility over the medium-term. The operating profit margins have consistently improved over the past three years to 19.99 percent in FY2025 compared to 15.24 percent in FY2024. Further, as per H1FY2026 financials, the EBITDA margin stood at 17.22 percent. This improvement in profitability is due to high margin sewerage treatment and water supply contracts. Consequently, the PAT margins have also improved to 9.74 percent in FY2025 from 5.93 percent in FY2024 and 1.24 percent in FY2023. Acuite believes, the operating performance of the company will improve over the medium term owing to the healthy unexecuted order book position.
Healthy financial risk profile:
The financial risk profile of SECL is healthy marked by moderate networth, healthy gearing and debt protection metrics. The net worth of the company improved to Rs.43.42 Cr. as on March 31, 2025 from Rs.24.03 Cr. as on March 31, 2024 due to accretion of profits to reserves and issue of fresh shares of worth Rs.0.16 Cr. at a premium of Rs.11.09 Cr. The networth further improved to Rs.79.54 Cr. as on September, 2025 from Rs.43.42 Cr. as on March 31, 2025 due to IPO proceeds. The total debt of the company stood at Rs.36.17 Cr. as on March 31, 2025 (comprising short-term debt of Rs.34.45 Cr., equipment loans of Rs.0.73 Cr. unsecured loans of Rs.0.12 Cr. and Rs.0.87 Cr. of current maturities of long-term debt) as compared to Rs.32.20 Cr. as on March 31, 2024. The gearing (debt to equity) has remained healthy at 0.83 times as on March 31, 2025 and total outside liabilities to tangible networth (TOL/TNW) improved to 1.64 times as on March 31, 2025 from 2.63 times as of previous year end. The debt protection metrics remained comfortable with debt service coverage ratio (DSCR) of 2.05 times and interest coverage ratio (ICR) of 2.91 times as on March 31, 2025. The debt to EBITDA stood at 1.83 times as on March 31, 2025. Acuite believes, the financial risk profile of the company would remain healthy on the back of improved networth position post IPO.
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| Intensive working capital operations:
The working capital operations of SECPL remains intensive, as reflected in the gross current asset (GCA) of 391 days in FY2025 compared to 355 days in FY2024. The stretch in GCA days is primarily driven by higher inventory levels, which increased to 211 days in FY2025 from 141 days in FY2024. The inventory primarily comprises work-in-progress of Rs.33.16 Cr. as on March 31, 2025 compared to Rs.18.24 Cr. as on March 31, 2024. The debtor days improved to 126 in FY2025 from 148 days in FY2024, though remained high due to higher billing during the last quarter of the financial year. The creditor days also increased to 196 days in FY2025 compared to 146 days in FY2024. The GCA position also includes retention money due from the customers in form of other current assets, which further elongating the working capital cycle. The fund based working capital limits were utilized at an average of 90 percent over the past 12 months ending January 2026, whereas non-fund-based limits were utilized at 91 percent during the same period. Acuite believes, the working capital operations of SECL will remain intensive due to its nature of operations, which requires higher inventory levels and elongated debtor days.
High customer concentration risk:
Nearly 79 percent of the current orderbook is concentrated with Chennai Metropolitan Water Supply and Sewerage Board, exposing the company to significant customer concentration risk, where any delay in execution of works or elongation in receivables could adversely impact the revenues and stretch working capital. However, the company is actively taking steps to mitigate this risk by expanding into new geographies, reflected in the L1 pipeline of Rs.254.52 Cr., which includes ~47 works from Bangalore Water Supply and Sewerage Board.
Susceptibility of profitability to volatility in raw material prices and tender based nature of operations
Most EPC projects undertaken by the company have a gestation period of 12–24 months, and during this time period, profitability remains susceptible to fluctuations in the input prices. SECPL executes majorly from PWD (Public works departments), which are highly competitive with the presence of a large number of small, regional, and large players. EPC projects executed by the company are tender-based, with wins going to the lowest bidder qualifying the terms and conditions stipulated by the respective agencies floating the bids. This puts strain on the profitability of the company where the bidding can get aggressive.
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