Experienced promoters with established track record

Mahalaxmi Dhatu Udhyog Private Limited (MDUPL) benefits from the extensive experience of its promoters, who have been associated with the steel industry for over two decades. Their long-standing presence in the regional market has enabled the company to build stable relationships with customers and suppliers, particularly in the power transmission and infrastructure segments. Acuite believes that the promoters’ experience supports procurement practices, operational continuity, and the company’s ability to operate through industry cycles over the medium term.

Steady scale of operations?

MDUPL reported an increase in its operating income to Rs 100.50 Cr. in FY2025 from Rs 90.39 Cr. in FY2024, driven by higher volumes catering to demand from the power transmission segment, almost 80 per cent revenue being derived from this industry. The company derives a significant portion of its revenue from the sale of steel angles. The scale of operations remained stable, with the company reporting turnover of  around Rs 111.23 Cr. for FY2026. Further, operating performance improved in FY2025, with EBITDA margin increasing to 5.75% from 4.85% in FY2024 and PAT margin to 1.25% from 0.66%, primarily due to sales to favourable customers offering better margins. Profitability margins are expected to remain at similar levels over the medium term. Acuite believes that the scale of operations and operating profitability are expected to improve, supported by better realisations from favourable customers and stable demand from the power transmission segment.

­Average financial risk profile

The financial risk profile of the company is characterized by an increasing net worth, moderate gearing, and average debt protection metrics. The tangible net worth stood at Rs. 21.32 crore as on FY2025, compared to Rs. 20.06 crore in FY2024, primarily on account of accretion to reserves. For FY2025, the gearing of the company increased slightly to 2.03 times in FY2025 from 1.76 times in FY2024.In FY2026, unsecured loans (USL) of Rs. 14 Cr. have been subordinated to the bank borrowings  and is expected to improve gearing.  The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) also increased to 2.12 times in FY2025 from 1.87 times in FY2024. In FY2026, unsecured loans (USL) of Rs. 14 Cr. have been subordinated to the bank borrowings. The Interest Coverage Ratio (ICR) Increased to 1.49 times in FY2025 from 1.45 times in FY2024. Also , The Debt Service Coverage Ratio (DSCR) decreased to 1.16 times in FY2025 from 1.38 times in FY2024. The net cash accruals to total debt (NCA/TD) stood at 0.04 times in FY2025. Acuite believes that the  financial risk profile of the company is expected to improve, in absence of any significant debt funded capex in the near term.

Intensive Working Capital Management

MDUPL’s operations exhibit intensive working capital cycle, as indicated by its high gross current asset (GCA) days of 188 days in FY2025 compared to 178 days in FY2024. This is largely due to elevated inventory and debtor levels. The debtor period improved to 47 days in FY2025 from 59 days in FY2024, although the company extends credit terms of up to 180 days to its long-standing customers, early discounting of receivables results in actual debtor days largely remaining in the range of 40–45 days. MDUPL’s inventory days stood at 120 days in FY2025 from 80 days in FY2024, primarily due to advance procurement of raw materials from SAIL during FY2025, as SAIL had scheduled captive plant repairs. Consequently, the company stocked up on raw materials to ensure uninterrupted production. Going forward, management expects inventory levels to remain at similar levels, as the company continues to procure raw materials at favorable prices and intends to maintain higher inventory to service confirmed and ongoing customer orders. This strategy necessitates maintaining elevated inventory levels over the medium term. MDUPL majorly pays its suppliers in advance, in line with industry norms. Acuité believes that the working capital operations of the company will remain at similar levels over the medium term.

Exposure to volatility in raw material prices

MDUPL is exposed to fluctuations in the prices of key raw materials, particularly steel billets, which constitute a major portion of its cost structure. The company operates in a pass-through pricing environment, where sharp declines in raw material prices can lead to lower realizations, while sudden increases can compress margins if not passed on immediately. This inherent volatility limits margin stability and adds uncertainty to earnings.

• ­ Revenue growth above Rs.150 Cr

• Improvement in debt protection metrices, largely DSCR of more than 2 times

• EBITDA margin below 2 per cent
• Intensive nature of working capital cycle
• Debt to EBITDA above 4 times.