­Established presence in the industry with considerable experience of promoters
The group is promoted by Mr. Nitin Khara and Mr. Elesh Khara, who possess more than two decades of experience in the LPG distribution business. The operations of the group are spread across the country with a total of 15-cylinder manufacturing units, 68 LPG bottling and blending plants and 325 ALDS with 295 currently operational. Therefore, this established position of the group along with diversification to various segment has supported the revenue growth over the years. The group recorded an increase in revenue to Rs.3145.76 Cr in FY2025 from Rs.2698.47 Cr in FY2024 (17% growth), primarily driven by higher LPG bulk/ merchant gas trading volumes, initiation of the CNG Pump business and growth in packed cylinder business. Further, in H1FY2026 revenue recorded substantial growth, stood at Rs.2095 Cr versus Rs.1523.69 Cr in H1FY2025, solely driven from bulk/merchant gas trading. Further, the group with the help of established track record of operations and management experience, has been able to build reputed client profile spanning both private as well as government companies in the energy and oil industry, viz. IOCL, BPCL and HPCL among others. The group also has well-established relationships with suppliers such as Steel Authority of India (SAIL)., etc. Also, the group is importing LPG mainly from Iraq.
Acuité believes that the group will continue to leverage its healthy relationships with customers and suppliers, operational track record and management expertise to further grow its presence in the industry.

Healthy financial risk profile 
The group has a healthy financial risk profile marked by tangible net worth of Rs.1329.51 Cr as on 31 March 2025 against Rs.1148.80 Cr as on 31 March 2024. The improvement is driven by profit accretion to reserves and proceeds from conversion of share warrants into equity shares. The gearing level of the group remained below unity at 0.40 time as on 31 March 2025, reflecting a balanced capital structure. While with increasing working capital and long-term debts for capex and business growth, debt coverage indicators moderated in FY25, however, interest coverage ratio (ICR) and Debt service coverage ratio (DSCR) remained comfortable at 4.71 times in FY2025 and 2.64 times in FY2025 respectively.
Acuité believes the overall financial risk profile is expected to remain strong in near to medium term on account of healthy accruals and absence of any substantial increase in the debt.

Moderately intensive working capital operations
The group has a moderately intensive working capital with moderate reliance on limits. GCA days rose to 137 in FY2025 from 127 in FY2024 due to higher deposits/advances for LPG bulk procurement. Inventory days remained stable at 32. Debtor days increased to 36 in FY2025 from 21, though 98% of receivables were collected within 30 days in H1FY2026. Creditor days rose to 14 from 9. Fund-based limit utilization stood moderate at ~70.07%, while non-fund-based limits remained low at ~25.99% over the six months ending November 2025.

Declining margins
The operating profitability margins of the group is continuously declining from 13.43% in FY2024 to 10.44% in FY2025 and 8.70% in H1FY26. This is driven by higher revenue contribution from low margin bulk/merchant trading, initial lower profitability of newly established CNG pumps and reducing revenue contribution from cylinder division. Further, with increasing interest liabilities PAT margins are also expected to moderate. Therefore, improvement in margins with continued revenue growth remains a key rating monitorable.

Significant capex expansions
The group has outlined a capex of ~Rs. 200 Cr annually across all segments (majorly in CNG and ALDS segment) over the next three years. In FY2025, capex of Rs. 275 Cr was completed. Funding will primarily be through internal accruals, with limited debt. Further, the group is in the process of establishing a terminal at Porbandar Port. Going forward, timely materialization and stabilization of the capex remains a key monitorable.

Exposure to risk inherent in tender-based business and presence in highly regulated business
The group manufactures LPG cylinders and is also engaged in the bottling of LPG for PSU Oil majors wherein it gets orders through tenders and operates in a highly fragmented industry, which limits its bargaining power, and may impact its profitability. However, the tenders include an escalation/ de-escalation clause on a monthly basis that restricts the risk to the extent of inventory carried by the group.
Further, the group is exposed to regulatory risks associated with tariff rates and changes in government policies for fuel. It also faces intense competition from other gas filling companies and gas pipeline companies with increased usage of gas pipeline in urban area. In addition to this, the group has to sell the cylinders only through permitted dealers with adequate/required/licensed infrastructure due to explosive/ PESO norms. This risk is to an extent mitigated on account of established network of 2000+ dealers across the country. Further, the group is exposed to volatility of margins as the total raw material cost forms ~69-70% of the total sale value. The prices of gases are decided by PSUs & being volatile in nature may affect group's ability to pass on the incremental prices to its customers.