| Experienced management and established track record of operations
KCCPL was established in 1978 and is led by its Managing Director & CEO, Mr. Hamish Shahani, along with other directors, including Mr. Shreedhar Anehosur – Director and Chief Operating Officer, and Mr. Stephan Maerz, representing Syntegon and also providing technical expertise. The company’s long track record of operations of more than four decades has helped in developing and maintaining healthy relations with its customer's globally. It has also maintained long-standing relationships with its vendors and suppliers. Acuité believes that the company will continue to benefit from the management’s experience and its association with reputed clients to sustain its business risk profile in the near to medium term.
Steady improvement in revenues and healthy profitability
The revenue of the company increased to Rs. 284.46 crore in FY26 (Prov.) as compared to Rs. 190.88 crore in FY25. The improvement is on account of the establishment of a Global Engineering Hub in Goa, India. The hub provides engineering design services, software support services, and technical solutions to Syntegon’s global operations. The company maintains a strong presence in both domestic and international markets, with ~61 per cent of its total revenue in FY2026 (Prov.) derived from international markets. Its key export destinations include the USA, China, Germany, and Thailand, amongst others. Domestically, the company operates in all the major metropolitan cities. The operating profit margin improved to 19.34 per cent in FY2026 (Prov.) from 16.64 per cent in FY2025 and 18.62 per cent in FY2024, primarily due to a reduction in employee costs and selling and administrative expenses during the period. The moderation in operating margins in FY2025 was primarily due to an increase in selling and administrative expenses, including higher business support service charges levied by Syntegon on KCCPL, thereby impacting margins. Further, the net profit margin improved to 13.68 per cent in FY2026 (Prov.) as compared to 11.60 per cent in FY2025. This improvement was driven by higher revenues and better operating profitability, which percolated down to the bottom line. Acuité believes the operating performance of the company would improve steadily due to a favourable demand scenario.
Healthy financial risk profile
The financial risk profile of the company remains healthy, marked by strong net worth, low gearing, and healthy debt protection metrics. The net worth of the company stood at Rs. 101.17 crore as on March 31, 2026 (Prov.), as compared to Rs. 84.34 crore as on March 31, 2025, on account of accretion of profits to reserves. The total debt of the company stood at Rs. 16.55 crore as on March 31, 2026 (Prov.), as against Rs. 19.55 crore as on March 31, 2025. The total debt as on March 31, 2026 (Prov.) consists of long-term debt of Rs. 0.83 crore, short-term debt of Rs. 15.10 crore, and maturing debt obligations of Rs. 0.62 crore. The gearing of the company stood low at 0.16 times as on March 31, 2026 (Prov.), as compared to 0.23 times as on March 31, 2025. The TOL/TNW (Total Outside Liabilities/Total Net Worth) stood at 1.21 times as on March 31, 2026 (Prov.) as against 1.13 times in the previous year. The Debt/EBITDA of the company stood at 0.29 times as on March 31, 2026 (Prov.), as against 0.58 times as on March 31, 2025. NCA/TD (Net Cash Accruals to Total Debt) stood at 1.17 times in FY2026 (Prov.) as against 0.56 times in FY2025. The debt protection metrics of the company remain healthy, marked by an Interest Coverage Ratio (ICR) and Debt Service Coverage Ratio (DSCR) of 26.98 times and 14.16 times, respectively, in FY2026 (Prov.) as against 15.00 times and 8.28 times, respectively, in the previous year. Acuité believes that the financial risk profile of the company is expected to remain healthy over the medium term.
|
| Working capital intensive operations
The company’s operations remained working capital intensive, reflected in high gross current assets (GCA) at 246 days in FY2026 (Prov.) as compared to 290 days in FY2025. Inventory days declined to 60 days in FY2026 (Prov.) from 78 days in FY2025. Further, debtor days remained high at 150 days in FY2026 (Prov.) as against 181 days in FY2025. While there is an improvement, debtor days continue to be elevated due to the milestone-based billing structure, wherein a portion of receivables is realised after one year, thereby elongating the collection cycle. Debtor collections are structured as 15–20 per cent in advance, 60–70 per cent on delivery of machinery/equipment, and the balance 10–15 per cent after one year, typically linked to project completion or performance terms. Creditor days stood at 204 days in FY2026 (Prov.) as compared to 176 days in FY2025, providing some support to the working capital cycle. However, reliance on working capital limits remained moderate, with ~66.96 per cent utilisation for the six-month period ended February 2026. Acuité believes the company’s working capital operations will remain intensive due to its project-based nature and will continue to be a key rating sensitivity over the medium term.
Susceptibility of profitability to volatility in raw material prices and forex fluctuation risk
The company’s profitability remains susceptible to fluctuations in raw material prices, with steel being a key input. However, the impact is partly mitigated, as procurement is spread over a period, allowing for averaging of purchase costs. Further, the company has high export exposure (~61 per cent of revenues in FY2026 (Prov.)), with exports to regions such as the USA, Europe, the Middle East, and Southeast Asia, resulting in earnings in multiple currencies, including USD and Euro. The company also imports around ~12 per cent of its total purchases, providing some degree of natural hedge. However, despite this partial mitigation, the company remains exposed to foreign exchange risk on the unhedged portion of transactions, which could impact overall profitability.
|
