Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuité has reaffirmed its long-term rating of 'ACUITE A' (read as ACUITE A)on the Rs.1.00 Cr. proposed bank facility and short-term rating of ‘ACUITE A1’ (read as ACUITE A one) on the Rs.76.25 Cr. bank facilities of S Kant Healthcare Limited (SKHL). The outlook is ‘Stable'.
Rationale for rating:
The rating reaffirmation considers the stable growth in operating revenue which is expected to continue in near term along with SKHL’s healthy financial risk profile with comfortable net worth, low gearing levels, healthy debt coverage indicators and a strong liquidity position. The rating also factors in the extensive experience of the management of more than five decades in the pharmaceutical industry and established operational track record. The rating, however, remains constrained on account of working capital-intensive nature of operations, susceptibility of profitability to volatility in raw material prices, and exposure to regulatory risk.
About the Company
Incorporated in 1996 by Mr. Bharat Shah and Mr. Samir Shah, S Kant Healthcare Limited (SKHL) is a closely held public limited company and is a part of the SK Group, which was established in the year 1932 and specializes in the business of pharmaceuticals. The current directors of the company are Mr. Bharat Shah, Mr. Samir Shah, Mr. Lalit Shah, Mr. Mahesh Shah, Mr. Ritesh Shah, and Mr. Mahesh Kolambe. SKHL is engaged in the manufacturing of antimalarial drugs and various active pharmaceutical ingredients (APIs). The company has a registered office in Worli, Mumbai, and a manufacturing unit in Vapi, Gujarat.
Unsupported Rating
Not applicable
Analytical Approach
Acuité has considered the standalone business and financial risk profile of SKHL to arrive at the rating.
Key Rating Drivers
Strengths
Establishedtrackrecordandexperiencedmanagement
SKHL incorporated in 1996 by Mr. Bharat Shah and Mr. Samir Shah, SKHL is a closely held public limited company and is a part of the SK Group, which was established in the year 1932 and specializes in the business of pharmaceuticals. It has an established track record of more than five decades in the pharmaceutical industry. The promoters, Mr. Bharat Shah, Mr. Samir Shah, and Mr. Lalit Shah, are the third- generation entrepreneurs and have over two decades of experience in the pharmaceutical sector. Acuité believes that the company will continue to benefit from its experienced management, which is likely to help company maintain long standing relations with its customers and suppliers and improve operating performance over the medium term.
Stable operating performance
The company has reported revenue of Rs.449.46 Cr. in FY2025 as against Rs.454.34 Cr. in FY2024. The revenues are moderated due to lower business from institutional customers in Africa and USA. The company has registered revenues of Rs.585.90 Cr. in FY2025-26(E). The EBITDA margins of the company remained range bound at 18.95 percent in FY2025 as compared to 23.35 percent in FY2024 and 11.47 percent in FY2023. The reason for moderated EBIDTA margin in FY2025 is mainly due to decrease in institutional business for anti – material products and dermatology segment. Acuité believes that NCTPL’s operating performance would improve steadily in the medium term on account of long-standing relationship with clients and repeat orders.
Healthy financial risk profile
The Company’s financial risk profile is marked by healthy net worth, gearing and debt protection metrics. The net worth of the company stood at Rs.236.65 Cr. as on March 31, 2025 as against Rs.184.92 Cr. as on March 31, 2024. The improvement in net worth is due to accretion of reserves. The gearing of the company stood at 0.15 times as on March 31, 2025, against 0.15 times as on March 31, 2024. Debt protection metrics – Interest coverage ratio (ICR) and debt service coverage ratio (DSCR) remained healthy and stood at 53.55 times and 40.51 times as on March 31, 2025, as against 45.49 times and 33.84 times as on March 31, 2024, respectively. TOL/TNW (Total outside liabilities/Total net worth) stood at 0.51 times as on March 31, 2025 as against 0.60 times, as on March 31, 2024. The debt to EBITDA stood at 0.41 times as on March 31, 2025, as against 0.27 times as on March 31, 2024. Acuité believes, that the financial risk profile is expected to be at similar levels over the medium term considering no debt funded expansion planned in near future.
Weaknesses
Workingcapitalintensive operation
SKHLs operations remained working capital intensive with Gross Current Asset (GCA) at 194 days in FY2025 as against 169 days in FY2024. GCA days also includes cash and bank balances of Rs. 45.14 Cr. Inventory days stood at 57 days in FY2025 as against 66 days in FY2024. Subsequently, the payable period stood at 77 days in FY2025 as against 92 days in FY2024 respectively. The debtor day stood at 73 days in FY2025 as against 66 days in FY2024. However, the average bank utilization limit in the last twelve months ended March 2025 remained at 27 percent for fund-based limits. Acuite believes, the operations of the company would remain working capital intensive on the back of elongated debtor days.
Susceptibilityofprofitabilitytovolatilityinrawmaterialprices andregulatoryrisk
The company's profitability is susceptible to volatility in raw material prices and foreign exchange rates. The company exports a major portion of its output to the USA, Ghana, Uganda, and Nigeria, among others. However, the same is mitigated by selectively hedging its risk exposure. Further, the company is also exposed to the regulatory risk associated with the export of medical drugs to the USA, the UK, and African countries, among others.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Consistent growth in revenues of over 30 percent aiding to expansion in scale of operations while maintaining healthy profitability
Improvement in working capital cycle
Potential triggers (individual or collective) for a downward rating action:
Significant decline in revenues and profitability
Any elongation of the working capital cycle with GCA above 200 days
Deterioration in financial risk profile owing to unexpected debt funded capex
Liquidity Position
Strong
The company has a strong liquidity position marked by healthy net cash accruals against which the company has no repayment obligations. The company has generated cash accruals in the range of Rs.63.57 Cr. in FY2025, while its maturing debt obligations were NIL during the same period. Going forward the company is expected to generate net cash accruals of Rs. 90- 108 Cr. in FY 2026-27 against nil debt obligations. The company has maintained unencumbered cash and bank balances Rs. 45.14 Cr. as on March 31, 2025. The current ratio stood at 2.12 times as on March 31, 2025. Further, the average bank utilization limit in the last twelve months ended March 2025 utilized at 27 percent for fund-based limits. Acuité believes that SKHL’s liquidity is likely to remain strong over the medium term, backed by healthy net cash accruals.
Outlook: Stable
Other Factors affecting Rating
None.
Particulars
Unit
FY 25 (Actual)
FY 24 (Actual)
Operating Income
Rs. Cr.
449.46
454.34
PAT
Rs. Cr.
51.67
66.10
PAT Margin
(%)
11.50
14.55
Total Debt/Tangible Net Worth
Times
0.15
0.15
PBDIT/Interest
Times
53.55
45.49
Status of non-cooperation with previous CRA (if applicable)
ACUITE A | Stable
(Upgraded from ACUITE A- | Stable)
Letter of Credit
Short Term
6.00
ACUITE A1
(Upgraded from ACUITE A2+)
Bank Guarantee (BLR)
Short Term
0.50
ACUITE A1
(Upgraded from ACUITE A2+)
Post Shipment Credit
Short Term
65.00
ACUITE A1
(Upgraded from ACUITE A2+)
Bank Guarantee (BLR)
Short Term
1.50
ACUITE A1
(Upgraded from ACUITE A2+)
26 Oct 2023
Cash Credit
Long Term
4.25
ACUITE A- | Stable
(Reaffirmed)
Letter of Credit
Short Term
6.00
ACUITE A2+
(Reaffirmed)
Bank Guarantee (BLR)
Short Term
0.50
ACUITE A2+
(Reaffirmed)
Post Shipment Credit
Short Term
65.00
ACUITE A2+
(Reaffirmed)
Bank Guarantee (BLR)
Short Term
1.50
ACUITE A2+
(Reaffirmed)
Lender’s Name
ISIN
Facilities
Listing Status
Regulated By
Date Of Issuance
Coupon Rate
Maturity Date
Quantum (Rs. Cr.)
Complexity Level
Rating
H D F C Bank Limited
Not avl. / Not appl.
Bank Guarantee (BLR)
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
Not avl. / Not appl.
1.50
Simple
ACUITE A1 | Reaffirmed
H D F C Bank Limited
Not avl. / Not appl.
Post Shipment Credit
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
Not avl. / Not appl.
74.75
Simple
ACUITE A1 | Reaffirmed
Not Applicable
Not avl. / Not appl.
Proposed Long Term Bank Facility
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
Not avl. / Not appl.
1.00
Simple
ACUITE A | Stable | Reaffirmed
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Contacts
List of instruments and names of regulators of the instruments
