| Experienced management and reputed clientele
KSRC was established by late Mr. Koneru Seshagiri Rao in 1965 who had more than 5 decades of experience in slag and material handling. Currently, his son Mr. K. Venkateswara Rao is handling the business, who has more than 2 decades of experience in the industry. The firm has an established relationship with reputed organizations like Jindal Steel Works Limited (JSWL), Jindal Steel and Power Limited (JSPL), Tata Projects Limited, Rastriya Ispat Nigam Ltd among others. Strong relationship with the key customers over the years has helped KSRC in getting repeated orders. Acuité believes that the KSRC derives significant benefit from its promoter experience and established strong relationships with its customers as well as suppliers for repeated business.
Stable growth in revenue from slag handling business with steady sales in residential complex:
The firm’s revenue improved to Rs.239.23 Cr. in FY2026 (Est.) against revenue of Rs.183.94 Cr. in FY2025 and Rs.161.12 Cr. in FY2024. Slag handling segment majorly contributes to the revenue improvement with around Rs.200.04 Cr. in FY2026 (Est.) compared to Rs.149.69 Cr. in FY2025 and Rs.148.03 Cr. in FY2024, while real estate sales estimated to be at Rs.39.22 Cr. FY2026 (Est.) compared to Rs.34.09 Cr. in FY2025 compared to Rs.12.68 Cr. in FY2024. The operating profit margin estimated to remain around 21.50-22.5 percent for FY2026 (Est.) as against 22.51 percent in FY2025 and 20.87 percent in FY2024. The stable operating margins are due to stable operations and fixed margins in slag handling segment. PAT margin is also estimated to improve around 6-7 percent as per FY2026 (Est.) from 2.75 percent in FY2025 due to increased overall profitability base.
Acuite believes, the revenue will improve over the medium-term on account of higher order book in slag handling segment and expected stable sales in residential project.
Strong execution progress and low funding risk in the real estate project:
The project demonstrates low execution and funding risk, supported by substantial physical and financial progress. As of March 31, 2026, construction is approximately 99 percent complete, with Rs.309.70 Cr. incurred out of the total construction cost of Rs.313.71 Cr., including incremental progress of Rs.67.46 Cr. over the six months ending March 2026, indicating a steady pace of execution. Overall, the project has achieved around 96 percent completion, with Rs.362.46 Cr. incurred out of the total project cost of Rs.377.98 Cr. The project is expected to be handed over by June 2027 as per RERA, while management anticipates completion by December 2026, reflecting strong execution capability. The funding profile remains comfortable, with the total project cost funded through Rs. 59.93 Cr. of equity (fully infused), Rs.100 Cr. of term loan, unsecured loans of Rs.26.60 Cr. (of which Rs.23.15 Cr. has been infused), and Rs.191.45 Cr. from customer advances. Against sales of Rs.168.22 crore, collections stand at Rs.165.32 crore, indicating strong customer realization. Additionally, Rs.90.30 crore has been drawn from the sanctioned term loan. The remaining cost of Rs.15.52 crore is expected to be met through the balance term loan and unsecured loans, thereby indicating low funding risk.
Above average financial risk profile:
The firm’s financial risk profile is above average, marked by healthy net worth, low gearing and above average debt protection metrics. The firm’s net worth stood at Rs.156.76 Cr. as on March 31, 2025 against Rs.153.71 Cr. as on March 31, 2024. The improvement in net worth is due to accretion of profits to reserves during the period. However, the promoters have withdrawn Rs.2.01 Cr. during the year. The total debt level comprising long-term debt of Rs.121.47 Cr., unsecured loans of Rs.14.47 Cr., short-term debt of Rs.35.52 Cr. and current maturities of long-term debt stood at Rs.177.97 Cr. as on March 31, 2025 compared to Rs.130.28 Cr. as on March 31, 2024. This resulted in marginal decline in the gearing level and total outside liabilities to tangible networth (TOL/TNW) to 1.14 times and 1.71 times, respectively as on March 31, 2025 from 0.85 times and 1.14 times as of March 31, 2024. The debt position is estimated to increase further in FY2026, due to drawdown of the term loan towards the projection construction. The debt protection metrics stood above average with debt service coverage ratio (DSCR) and ICR of 1.30 times and 2.42 times respectively as on March 31, 2025. Debt to EBITDA increased to 4.30 times as on March 31, 2025 against 3.87 times as on March 31, 2024 primarily due to inclusion of real estate project debt, where the project level average DSCR stood at 1.61 times. Acuite believes that the financial risk profile of the firm will improve over the medium term due to increasing scale of operations.
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| High demand risk in the real estate project:
The project is exposed to high demand risk, as reflected in the moderate sales achieved and weak recent traction. The firm has sold approximately 2,86,900 sq. ft. (Rs.168.22 Cr.) out of the total saleable area of 8,19,500 sq. ft. However, incremental sales during the period from September 2025 to March 2026 remained subdued at Rs.3.64 Cr. (around 31,030 sq. ft.), indicating sluggish demand momentum.
With the project nearing completion (approximately 96 percent) and largely funded through customer advances, unsecured loans, debt, and equity. The repayment of debt, commencing from March 2027 will be primarily dependent on future sales and collections. While the project benefits from a favourable location in the prime residential corridor of Madeenaguda–Miyapur, an established micro-market with strong end-user demand and proximity to key commercial and IT hubs, an improvement in sales velocity remains a key rating sensitivity.
Moderately intensive working capital operations:
The firm’s working capital operations are moderately intensive despite the high gross current asset (GCA) of 735 days in FY2025 against 650 days in FY2024. The increase in GCA is primarily due to rising inventory levels, driven by work-in-progress from real estate segment, which is estimated to increase further as the construction progress (the WIP will be knocked off up on sale of the project). The inventory in slag handling business includes spares and fuel stock. However, elongated receivables period at 101 days in FY2025 lead to moderate dependency on the fund based working capital limits, which were utilized at an average of ~85 percent during the past 12 months ending February, 2026. Acuite believes that the working capital cycle of the firm will remain moderately over the medium term, as the nature of the business requires maintaining adequate stock levels for continuous operations.
Inherent risk of capital withdrawals in partnership firms:
K Seshagiri Rao & Co is susceptible to the inherent risk of capital withdrawals by partners, given its constitution as a partnership firm. Any substantial withdrawals from partners capital wil have a negative impact on the firm's financial risk profile and can constrain the firm's ability to maintain adequate liquidity.
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