| Established track record of operations
The group holds an IP-1 registration from the Department of Telecommunications (DoT) which allows it to establish, maintain, and lease passive telecom infrastructure to telecom service providers. Further, group’s operations span into the deployment, leasing on indefeasible right of ue (IRU) and annual recurring charge (ARC) basis and maintenance of OFC networks, tower erection, Fiber to the home (FTTH) rollout, and O&M services. It has built and owns over 25,000 kilometers of OFC network and completed more than 60,000 FTTH home passes and connected more than 100 data centres in western and southern region. The major operations are currently in the western and southern parts of India where the majority of IT hubs are located. It has executed several marquee projects, including the installation of 1600+ towers, OFC connectivity between Mumbai and Chennai spanning 5,000 kilometers in different paths, OFC Network at Pune, Mumbai, Hyderabad Metro & Monorail in Mumbai, also got exclusive rights of monetization of OFC network in the area of Pune Municipal Corporation and Pimpi Chinchwad Municipal Corporation. Its clientele includes major telecom operators such as Airtel, Jio, Vodafone, Tata Communications, Sify, Tata Tele and Lightstorm telecom, data center connectivity, NLD Players, MSO/ISP and LCO etc. as well as public sector entities like BSNL, MTNL, Indian Railway, RailTel, Powergrid and Mahaprit. Furthermore the group is promoted by Mr. Dinesh Kargal, who serves as Chairman and Managing Director and brings over 36 years of experience in telecom infrastructure and is supported by Mrs. Shashikala D. Kargal.
Healthy orderbook position expected to improve the operating performance over the medium term
While the revenues of the company stood lower at Rs. 745.1 Cr. in FY25 as against Rs. 1,112.29 Cr. in FY24, due to execution completion of a significant Bharat Sanchar Nigam Limited (BSNL) order in FY24, however, the current outstanding orderbook of Rs. 2,094.79 Cr. as on September 30, 2025, providing a sound and improving revenue visibility over the medium term. In the current year, the group has marked a revenue of ~Rs. 450 Cr. in H1FY26. Further, the company reported a sharp increase in the operating margins to 30.63 percent in FY25 as against 26.23 percent in FY24 due to reduction in cost of material consumed. Therefore, the continued growth in order book and timely execution of contracts at steady margins shall be a key rating sensitivity.
Healthy financial risk profile
The group’s financial risk profile is marked by healthy net worth base and moderate debt level. The net worth of the group increased to Rs. 747.82 Cr. as on March 31, 2025, from Rs. 632.15 Cr. as on March 31, 2024, due to accretion of profits to reserves. The overall gearing increased due to increase in long term loan which the company had taken for acquiring a commercial property, however remained moderate at 0.46 times as on March 31, 2025 (0.37 times as on March 31, 2024), Moreover, the coverage indicators remained moderate with interest coverage ratio and debt service coverage ratio at 5.75 times and 1.39 times for FY2025.
Acuité expects the financial risk profile of the company to remain healthy in the absence of any significant debt funded capex and improving cash accruals.
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| Intensive working capital operations
The group’s working capital operations remain intensive, as indicated by gross current asset (GCA) days of 530 days as of March 31, 2025 (327 days as of March 31, 2024). The increase is primarily driven by a rise in debtor days, largely due to pending receivables from BSNL which is expected to release post file closure and performance testing which is last mile payment as per the contract. Additionally, the GCA days are impacted by an increase in inventory levels and substantial other current assets consisting of contract assets representing amounts due from customers for completed work that are yet to be invoiced. The contract assets are high due to deferred billing pattern as per the tower contracts. On the other hand, group enjoys a higher credit period from its subcontractors along with the upfront receipts from the IRU business.
Acuité believes that working capital operations of the company may continue to remain intensive considering the nature of business.
Customer concentration risk along with tender based nature of operations
The group primarily serves leading telecom operators in the country, along with select data center companies. As of now, approximately 80% of its revenue is contributed by the top five customers, up from around 65% in FY24. This heightened customer concentration is largely due to the execution of a major order from BSNL in FY24 and FY25. Further the group is mitigating the risk by executing orders for railways, metro and some municipal authorities in the current year.
The group is engaged in bidding various tenders, wherein it faces intense competition from large as well as mid-sized local players in the sector. The risk becomes more pronounced as tendering is based on a minimum amount of bidding for contracts. It acquires tenders at competitive prices, which may affect its profitability. Further, there are uncertainties attached to the allotment of tenders. However, the risk is mitigated, given the group’s strong background in the industry and significant presence, which has enabled them to procure tenders on a regular basis.
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