| Experienced management and Established track record of operations
LIPL has an established operational track record of nearly two decades, with its operations led by the key promoter, Mr. Afzal Khan, who possesses extensive experience of around two decades in the power infrastructure industry. The long-standing presence of the company, coupled with experienced management, has enabled it to build and sustain healthy relationships with its clientele, which primarily includes various government entities. Acuité expects the company to continue deriving benefits from its established market position and the promoter’s industry expertise, which are likely to support its ability to secure new orders going forward.
Moderate Financial Risk Profile
The financial risk profile of the company is marked by average net worth, gearing below unity, and moderate debt protection metrics. The net worth stood at Rs. 52.45 Crore as on 31st March 2026 (Prov.) against Rs. 51.91 Crore as on 31st March 2025. The slight increase in net worth is on account of low accretion of profits into reserves. The capital structure of the company is marked by gearing ratio, which stood at 0.23 times as on 31st March 2026 (Prov.) and 31st March 2025. Further, the coverage indicators are reflected by the interest coverage ratio and debt service coverage ratio, which stood at 1.56 times and 1.39 times, respectively, as on 31st March 2026 (Prov.). The TOL/TNW ratio of the company stood at 0.34 times as on 31st March 2026 (Prov.) against 0.30 times as on 31st March 2025. Acuité expects the financial risk profile of the company to remain in a similar range with no major debt-funded capex plans in the near to medium term.
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| Decline in scale of operations
The operating income of the company stood at Rs.29.02 Cr. in FY2026 (Prov.) as against Rs.38.70 Cr. in FY2025 on account of lower execution of orders. At the profitability level, the EBITDA margin deteriorated significantly to (7.56)% in FY2026 (Prov.) as against 7.89% in FY2025 owing to lower absorption of expenses amid lower revenue generation. The PAT margin stood at 1.87% in FY2026 (Prov.) as against 2.96% in FY2025. Furthermore, the company has a low unexecuted order book of Rs. 15.57 Cr. as on 31st March 2026. The projects are on direct tendering basis and are primarily from government organizations related to electrical transmission and distribution substations, along with a civil construction project. Additionally, the company also has orders in pipeline of Rs.225.00 Cr. as on 31st March 2026. Acuite notes that going forward, the ability of the company to convert pipeline orders, bag new orders, and timely execute the existing orders will be a key rating sensitivity.
Intensive Working Capital operations
The working capital operations of the company are intensive, marked by GCA days which stood at 738 days as on 31st March 2026 (Prov.) as against 503 days as on 31st March 2025. The GCA days are high primarily on account of a high outstanding balance in the form of receivables and high inventory levels. The debtor days stood high at 302 days as on 31st March 2026 (Prov.) as against 171 days as on 31st March 2025 due to delay in receipt of payments from the clientele, which primarily include government entities. Besides, the debtor balances also include retention money, which is retained by the clientele. Further, the inventory holding stood at 334 days as on 31st March 2026 (Prov.) against 299 days as on 31st March 2025 and the creditor days stood at 44 days as on 31st March 2026 (Prov.) against 51 days as on 31st March 2025. The working capital operations of the company are expected to remain at similar levels in the near to medium term owing to the nature of operations as the EPC business retains a naturally elevated working capital intensity, attributed to prolonged project execution timelines, payments tied to project milestones, and release of retention money. Acuite notes that going forward, any further stretch in the working capital cycle will be a key monitorable factor.
Presence in highly competitive nature of industry and susceptibility of margins to fluctuation in raw material prices
The civil construction sector is highly fragmented, marked by the presence of several mid to big-sized players. The company's revenue is driven by its ability to bid successfully for tenders. The company faces competition from large players as well as many local and small unorganized players, which may, hence, require it to bid aggressively to get contracts. Also, given the cyclicality inherent in the industry, the operating margins of the company are susceptible to volatility in raw material prices. The ability of the company to maintain its profitability margin through operating efficiency becomes critical.
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