| Established track record of operations and ? Experienced Management
The Arham group is led by experienced promoters, Mr. Abhay Jain, Mr. Atul Jain, and Mr. Amit Jain, who possess over three decades of industry experience and oversee the business operations. The group's revenue profile is predominantly trading-oriented, with trading sales contributing approximately 72%-75% of total revenue during the last three years. On the other hand, manufacturing sales contributed around 24%-28% over the same period. The established track record of operations, coupled with the experience of the promoters in the scrap metal industry, has benefited the group in building established relationships with customers and suppliers. Acuite believes that the group will continue to derive benefit from the established track record of operations and experienced management’s strong understanding of market dynamics.
Improvement in revenue and profitability
The operating revenue of the group stood at Rs. 715.63 Cr. in FY2026 (Prov.) as against Rs. 637.65 Cr. in FY2025, driven by the higher volumes across stainless steel and other metal scrap, as well as stainless steel products. While stainless-steel scrap continued to remain the largest contributor to revenue, growth was largely supported by increased sales of other metal scraps, including aluminium, brass, copper, zinc, and nickel scrap, among others. Further, the profitability also improved, with the EBITDA margin increasing to 5.30% in FY2026 (Prov.) against 4.83% in FY2025. The improvement is supported by better absorption of fixed costs led by higher turnover. Likewise, the PAT margin stood at 2.01% in FY2026 (Prov.) against 1.58% in FY2025. Acuite expects the topline of the group to improve in the near to medium, supported by its established market presence and expected benefit following capacity enhancement in its manufacturing facility under Aagam Stainless Private Limited. However, the ability of the group to improve its profitability margins while scaling up its operations in the near to medium term will remain a key monitorable factor.
Prudent Working Capital Operations Management
The working capital operations of the group are prudently managed, marked by GCA days of 97 days as on 31st March 2026 (Prov.). The group maintains adequate inventory, as and when required for order execution, despite the same, the inventory days stood at 44 days as on 31st March 2026 (Prov.) as against 55 days as on 31st March 2025. Further, the debtor days stood at 40 days as on 31st March 2026 (Prov.) as against 26 days as on 31st March 2025 and the creditor days stood at 8 days as on 31st March 2026 (Prov.) as against 13 days as on 31st March 2025. Acuite expects the working capital operations of the group to remain on similar levels in the near to medium term, supported by effective inventory and receivables management by the group.
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| Moderate Financial Risk Profile
The financial risk profile of the group is moderate, marked by modest net worth, high albeit improving gearing, and moderate debt protection metrics. The tangible net worth of the group stood at Rs. 50.70 Cr. as on 31st March 2026 (Prov.) as against Rs. 36.32 Cr. as on 31st March 2025 on account of accretion of profits into reserves. The capital structure marked by the gearing ratio stood at 3.42 times as on 31st March 2026 (Prov.) as against 3.93 times as on 31st March 2025. The relatively high leverage is primarily on account of higher short term working capital borrowings required to fund the group's scale of operations as well as unsecured loans extended by management and others. Moreover, the coverage indicators as reflected by the interest coverage ratio and debt service coverage ratio stood at 2.31 times and 1.77 times, respectively, as on 31st March 2026 (Prov.). Further, Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 3.88 times as on 31st March 2026 (Prov.) as against 4.79 times as on 31st March 2025, and the Debt/EBITDA stood at 4.51 times as on 31st March 2026 (Prov.) against 4.56 times as on 31st March 2025. Acuite expects the financial risk profile of the group to remain moderate amid proposed debt-funded capex plans to set up an automated processing plant in the near to medium term.
Highly competitive industry and Susceptibility of margins to fluctuations in raw material prices
The group remains exposed to the inherent challenges of operating in a highly competitive steel and scrap metal processing industry, where the presence of numerous organized and unorganized players limits pricing power and often compresses operating margins. In this environment, sustaining differentiation becomes difficult, especially as customer preferences are price-sensitive and market cycles can shift quickly. Further, the group’s profitability is also susceptible to volatility in the prices of key raw materials. In case of any sharp raw material cost fluctuations, the ability of the group to pass on such adverse impact to its customers and sustain its operating profitability will be a key rating monitorable factor.
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