| Experienced Promoters and stable growth in operating income
AIL was incorporated in the year March 2008, and promoted by Mr. Rakesh Gupta, Mr. Parag Gupta and Ms. Uma Gupta. who have been engaged in the iron and steel industry for over four decades. Currently, AIL’s business is handled by Mr. Akash Gupta (son of Mukesh Gupta) who has one decade of experience in steel industry. The company’s operating income is stable with YOY growth of 10.74 percent which stood at Rs. 520.84 Cr. in FY2025 as compared to Rs. 470.32 Cr. in FY2024 and Rs. 393.96 Cr. in FY2023. The growth in FY 2025 was driven by higher share of TMT bars revenue. Additionally, the company follows a B2B model, wherein its partners distribute AIL’s products under their own brand names. Acuité believes that the experience of promoters and stabilization of TMT bar capacity will benefit the company going forward, resulting in steady growth in the scale of operations and profitability.
Healthy financial risk profile
Company’s financial risk profile is healthy, marked by moderate net worth (Inclusive of quasi equity) along with low gearing and moderate debt protection metrics. The net worth of the company stood at Rs.86.05 Cr. as on March 31st, 2025, against Rs.68.46 Cr. as on March 31, 2024, and Rs. 62.93 Cr. as on March 31st, 2023 respectively. The net worth improved on account of quasi equity of Rs. 89.92 Cr. (USL has been considered as quasi equity). The gearing of the company stood at 0.95 times as on March 31, 2025, as against 0.72 times as on March 31, 2024, and 0.54 times as on March 31st, 2023. Total debt includes short term debt of Rs. 35.18 Cr , long term debt of Rs. 46.51 Cr. as on March 31st ,2025. Company’s debt protection metrics is moderate marked by– Interest coverage ratio (ICR) and debt service coverage ratio (DSCR) stood at 1.96 times and 1.23 times as on March 31, 2025, respectively as against 1.54 times and 1.11 times as on March 31, 2024, and 1.97 times and 2.04 times as on March 31, 2023. TOL/TNW stood at 1.42 times as on March 31st, 2025, against 1.25 times as on March 31st , 2024 and 0.97 times as on March 31st, 2023, respectively. The debt to EBITDA of the company stood at 3.17 times in March 2025 as against 3.05 times in FY2024 and 2.86 times in FY2023. Acuité believes that the financial risk profile will remain moderate over the medium term on the back of stabilization of capacities and absence of any planned debt funded capex.
Efficient working capital operations
AIL's working capital operations are efficient in nature as reflected in the gross current assets (GCA) of 44 days in FY2025 against 27 days in FY2024 and 32 days in FY2023. The GCA days include majorly inventory of 28 days in FY2025 compared to 16 days in FY2024 and 18 days in FY2023. This increase reflects the impact of expanded production capacities for sponge iron and MS billets, which necessitated higher raw material stocking and work-in-progress levels. Company requires raw materials like Coal, Iron Ore and Scrap for manufacturing operations. Iron Ore is procured by way of auction from MSTC after payment of full material value in advance. The company allows 15-20 days credit period for its customers resulting in debtors of 15 days in FY2025 against 5 days in FY2024 and nil days in FY2023. Acuite believes, the working capital operations are expected to remain efficient over the medium term on the back of quicker collections.
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| Thin profitability margins
The company’s operating profitability improved to 4.81 percent in FY2025, compared to 3.39 percent in FY2024 and 2.99 percent in FY2023. Although EBITDA margins have strengthened, they remain thin due to limited pricing flexibility in a highly competitive and cyclical industry. The improvement is primarily driven by integrated operations in MS billets and TMT bars, supported by captive consumption of raw materials. PAT margins have remained range- bound between 0.00% and 0.76% over the last three fiscal years, indicating modest net profitability. With the commissioning of an induction furnace in March 2025, the company is expected to increase TMT bar sales volumes, which could support margin expansion going forward. The ability to sustain and further improve profitability margins remains a key monitorable.
Highly competitive and cyclical industry
The steel industry is highly cyclical, closely tied to overall economic trends. Key consuming sectors such as construction, infrastructure, automotive, and capital goods depend on economic conditions, so any slowdown in activity directly impacts steel demand. Additionally, global supply-demand dynamics—particularly China’s influence—play a critical role in determining steel prices and production levels. As a result, finished steel producers largely operate as price takers, making their cash flows and profitability vulnerable to fluctuations in end-user demand.
Profitability susceptible to volatility in raw material prices
Iron ore and coal, the primary raw materials for steel production, account for the largest share of the company’s cost of sales. Essential inputs such as iron pellets, coal, and pig iron— required for manufacturing sponge iron—are predominantly sourced from the domestic market. In FY2025, these major raw materials constituted approximately 80–85% of the total cost of sales. Given the reliance on domestic procurement, the company remains exposed to significant price volatility in these inputs, making its profitability highly sensitive to fluctuations in raw material costs.
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