| Extensive Experience of Promoters and long operational track record
The promoter, Mr. Rajiv Bhatia has experience of more than two decades in leather product manufacturing and export business, which has helped the company establish a strong customer base over the years. Currently, the second generation, Mr. Viraj Bhatia and Mr. Vashisht Bhatia have also entered the business. The long-standing experience of the promoters and long operational track record has consequently helped them to establish high customer vintage, loyalty and a strong connect with its overseas customers and comfortable relationships with key suppliers. Its customer base includes international brands such as Marks and Spencer's, Radley and co., Adolfo Dominguez, Piquadro, etc with whom the company has an established relationship of over a decade, thus entails repeat orders. The company is procuring new clients i.e., Coach, ZARA, Country Road (Australia) and are connecting with Dillard’s (American departmental store) to reduce the concentration risk.
Acuité believes that, DIPL would benefit from the promoter’s extensive experience and its establish relationship with key customers to ensure repeat orders.
Modest scale of operation with stable operating performance
The company has achieved revenues of Rs.145.97 Cr. in FY2025 as compared to revenues of Rs.117.17 Cr. in FY2024. Further, DIPL has achieved revenues of Rs.141.17 Cr. in FY2026 (Est.) and are expecting to close FY2027 in the similar range itself. The company’s profitability remained comfortable however witnessed a moderate decline with EBITDA margin reduced to 8.32% in FY2025 from 9.86% in FY2024, amid geopolitical tensions and volatility in leather prices. The EBITDA margin in FY2026 (Est.) is estimated to be in the range of 8-10 per cent, owing to a relatively lower impact of the aforementioned factors. The PAT margin stood at 4.69% in FY2025 as compared to 4.43% in FY2024 which also estimated to improve in FY2026 (Est.) in the range of 4-6 per cent.
Acuite believes that the operating performance of the company is expected to improve in near to medium terms owing to a relatively lower impact of the geopolitical factors.
Moderate financial risk profile
The company’s financial risk profile remained moderate marked by moderate net worth, low gearing and comfortable debt protection metrics. The tangible net worth of the company improved to Rs.56.32 Cr. as on March 31, 2025 from Rs.49.48 Cr. as on March 31, 2024, on account of accretion of profits into reserves. Total debt of the company stood at Rs.38.02 Cr. includes long term debt of Rs.1.48 Cr, Short term debt of Rs.34.34 Cr, and maturing portion of debt obligation is Rs.0.13 Cr. The increase in the short term debt is due to higher utilisation of limits in the year end. Gearing of the company stood at 0.68 times as on March 31, 2025 as compared to 0.52 times as on March 31, 2024. Total outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 1.07 times as on March 31, 2025 as against 0.88 times as on March 31, 2024. The Debt /EBITDA of DIPL stood at 2.62 times as on March 31, 2025 as against 2.19 times as on March 31, 2024. The comfortable debt protection metrics of the company is marked by Interest Coverage Ratio (ICR) at 4.59 times in FY2025 as against 4.47 times in FY2024; and Debt Service Coverage Ratio (DSCR) at 3.70 times in FY2025 as against 1.86 times in FY2024. Net Cash Accruals/Total Debt (NCA/TD) stood moderate at 0.24 times as on March 31, 2025.
Acuite believes that the financial risk profile of the company is going to improve in near to medium terms on account of no debt funded capex plans.
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| Moderately Intensive working capital operations
The working capital operations of the company is moderately intensive, marked by high Gross Current Assets (GCA) of 241 days on 31st March 2025 as compared to 229 days on 31st March 2024. The stretch in the GCA days is mainly on account of elongated debtor period which stood at 129 days as on March 31, 2025 as against 119 days as on 31st March 2024. Further the inventory days stood at 85 days in FY2025 as against 88 days in FY2024 while the creditor days stood at 105 days in FY2025 as against 117 days in FY2024. The fund-based limit remained moderately utilised at ~24.16 percent over the six months ended March 31, 2026.
Acuite believes, the working capital operations are expected to be in a similar range in near to medium terms.
Geographic concentration risk
The company is exposed to geographical concentration risk as the major portion i.e. over 90 per cent of the revenues coming from the European markets, thus the company remains susceptible to demand cyclicality in the end-user markets. However, the risk is mitigated to an extent as DIPL has an established relations of over a decade with its key customers in European markets.
Susceptibility to fluctuations in raw material prices and Forex risk
Fluctuations in raw material prices have led to increased production costs, significantly impacting the company's operating profit margins. Further, being an export-oriented entity, the company remains exposed to adverse changes in foreign currency, as it exports over 90 per cent of its sales to European countries with imports constituting ~ 5-10 per cent of purchases. While the forex risk is mitigated to an extent by natural hedging, the company is also using forward contracts to hedge the ~80 per cent of its exposure This insulates the company from adverse fluctuations in the forex rates to a great extent.
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