| Experienced management:
Seutic Labs Private Limited (SLPL) and Seutic Pharma Private Limited (SPPL) are managed by a team of experienced directors, including Mr. Venkata Siva Vara Prasad Valivarthi, Ms. Padma Valivarthi, Mr. Gunturu Jayaram, Mr. Kodanda Ram Babu Punukollu, Mr. Prithvi Prasad Motaparti and Mr. Sudhakar Kalle, who collectively oversee the group’s operational and strategic functions. The management possesses relevant industry experience and has been instrumental in establishing the group's operational base and ensuring compliance with quality and regulatory requirements. During FY2026, the group witnessed a significant change in its shareholding structure, with Mr. Motaparti Sivaram Prasad and Ms. Motaparti Rajyalakshmi acquiring a 75 percent stake. The new promoters have infused funds amounting to Rs.70 Cr. (Rs.17 Cr. as equity and Rs.53 Cr. as securities premium), which is expected to support the group’s liquidity and aid in scaling up its operations. The management’s ability to effectively utilize the infused capital and improve the scale of operations and financial performance will remain a key monitorables going forward.
Moderate financial risk profile:
Seutic group’s financial risk profile is marked by healthy net worth, gearing and moderate debt protection metrics. The net worth is estimated to improve around Rs.80-82 Cr. as on March 31, 2026 (Est.) from Rs.11.23 Cr. as on March 31, 2025, due to infusion of Rs.17 Cr. share capital along with addition of Rs.53 Cr. as securities premium and accretion of profits during the year. The total debt level is estimated to be around Rs.65.00 Cr. as on March 31, 2026 (Est.) (comprising Rs.48.27 Cr. short-term debt, Rs.4.07 Cr. long-term debt, Rs.10.69 Cr. of unsecured loans from promoters and others and Rs.1.97 Cr. of current maturities of long-term debt) as against Rs.66.28 Cr. as on March 31, 2025. The gearing level has improved to 0.80 times as on March 31, 2026 (Est.) from 5.90 times as on March 31, 2025 due to improved networth base in FY2026. The promoter infused funds were utilized towards closure of long-pending trade payables, which is estimated to improve the total outside liabilities to tangible net worth (TOL/TNW) to 1.64 times as on March 31, 2026 (Est.) from 14.29 times as of March 31, 2025. The debt protection metrics are estimated to remain moderate with interest coverage ratio (ICR) of 1.34 times and debt service coverage ratio (DSCR) of 1.24 times as on March 31, 2026 (Est.). Further, the debt to EBITDA is estimated to remain high at 6.15 times as on March 31, 2026 (Prov.) against 5.68 times as of March 31, 2025. Acuite believes, the financial risk profile of the group will remain moderate over the medium term.
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| Moderation in operating cycle along with thin profitability margins:
Seutic group’s revenue improved marginally to Rs.109.88 Cr. in FY2026 (Est.) from Rs.105.91 Cr. in FY2025, supported by better capacity utilisation and higher sales volumes, however overall operating scale declined, where group reported revenues of Rs. 191.55 Cr. in FY2023 and Rs. 145.72 Cr. in FY2024. The operating profit margin is estimated to range bound at ~9.5 percent in FY2026 (Est.) as against 10.91 percent in FY2025 and 9.50 per cent in FY2024. However, the PAT margin is estimated to remain thin at ~0.40 percent in FY2026 (Est.). Acuite believes, the scale of operations is likely to improve slowly over the medium term, driven by diversification into new products and increased capacity utilization.
Intensive working capital operations:
The working capital operations of the group remained intensive as evident through the estimated gross current asset (GCA) of ~560 days in FY2026 (est.) as against 459 days in FY2025. The stretch in GCA is primarily due to high inventory holding level and stretch in debtor days. The inventory level primarily comprises work in progress and raw material is estimated to be around 400-420 days for FY2026 (est.) as against 337 days in FY2025. The high inventory levels typical across the industry, which requires to maintain large inventory of raw material and simultaneously work-in-progress due to diversification into multiple products. The debtors are estimated to be around ~170 days for FY2026 (est.) as against 141 days in FY2025. The creditor days are estimated to be around ~210 days for FY2026 (Est.) as against 229 days in FY2025. The fund based working capital limits were highly utilized at an average of 99 percent over the past 9 months ending May 2026. Acuite believes, the working capital operations of the group will remain intensive over the medium-term on account of higher inventory levels and elongated receivable period.
Presence in a highly competitive industry:
The Seutic group operates in the pharmaceutical industry, which is characterized by intense competition from a large number of established and emerging players, both in the domestic and export markets. The industry is marked by pricing pressures, low entry barriers in certain segments and continuous demand for product innovation and regulatory compliance. This competitive intensity limits pricing flexibility and may impact the group’s ability to achieve significant margin expansion. Additionally, the presence of larger, well-established players with stronger financial and distribution capabilities poses challenges in terms of market penetration and customer retention. Going forward, the group’s ability to scale up operations, diversify its product portfolio and maintain consistent quality standards will remain crucial to sustaining its competitive position.
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