| Established track record of operations along with experienced management
Being in operations for more than fifteen years, MGEL has established a significant market presence in the domestic and international markets leading to a healthy relationship with its suppliers and customers. Moreover, the group operates four manufacturing facilities located at Bavla (Unit I), Jotana (Unit II), and Kapadvanj (Units III & IV), having operations for processing of wheat, rice, cotton, and castor oil, as well as the refining of edible oils. The facilities are utilized flexibly based on prevailing industry dynamics, market demand, and product mix requirements. Further, the promoter of the group, Mr. Vipin Prakash Mangal has over three decades of experience in the manufacturing and trading industry and is ably supported by the second generation in the business operations.
Healthy scale of operations
The operating revenue of the group stood healthy at Rs. 3384.45 Cr. in FY26 as compared to Rs. 2281.45 Cr. in FY25 and Rs. 1838.51 Cr. in FY24, reflecting an y-o-y growth of ~36 percent over the past two years. The group's revenue growth was primarily driven by improved capacity utilisations leading to higher contribution from edible oils, particularly soya and palm oil, whose share increased to around 60 percent in FY26 from 25 percent in FY25, resulting in a lower contribution from the castor segment. Furthermore, the group derives majority of its revenues from B2B business, with refining division contributing ~60 percent and the trading segment around 40 percent of total revenue in FY26. Additionally, the group derives majority of its revenue from the domestic market, which contributed approximately 85 percent, with the balance 15 percent generated through exports in FY26. Going forward, the sustenance in the scale of operations shall remain key monitorable.
Moderate financial risk profile
The financial risk profile of the group is moderate marked by net worth of Rs. 248.0 Cr. as on March 31, 2026, as compared to Rs. 201.51 Cr. as on March 31, 2025, improved on account of accretion of profits to reserves. Moreover. the group has raised Rs. 41.20 Cr. in FY25 via rights issue reflecting strong resource mobilisation ability. Further, the total debt of the group stood reduced at Rs. 214.71 Cr. in FY26 (Rs. 224.49 Cr.) which primarily comprises of working capital borrowings. Therefore, the gearing (debt/equity) ratio stood improved and below unity at 0.87 times in FY26 (1.11 times in FY25). Furthermore, TOL/TNW stood at 2.23 times in FY26 (1.72 times in FY25). Moreover, the debt protection metrics stood comfortable marked by interest coverage ratio of 2.82 times in FY26 (2.11 times in FY25) and debt service coverage ratio of 2.19 times in FY26 (1.61 times in FY25).
Additionally, in FY27, the group has availed additional working capital term loan under ECGLS 5.0 scheme amounting to Rs. 33.64 Cr. which is expected to moderate the financial risk profile to some extent. However, going forward, with continued cash accruals and no major debt-funded capex plans, the financial risk profile is expected to improve over the medium term, which remains a key rating monitorable.
Efficient working capital operations
The working capital operations of the group stood efficient as reflected in its gross current assets (GCA) days of 78 days in FY26 (75 days in FY25). The GCA cycle is primarily driven by debtor levels that stood at 53 days in FY26 (44 days in FY25) owing to higher sales in Q4FY26, while average credit period extended to its customers is 30-45 days. Further, the group maintains minimal inventory levels of 15-30 days resulting in inventory days of 17 days in both FY25 and FY26 as they operate under back-to-back arrangements. Further, the group receives an average credit period of 30-60 days from their suppliers, leading to creditor days of 37 days in FY26 (20 days in FY25).
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| Thin operating margins driven by commodity nature of business and intense competition
The edible oil refining industry is marked by inherently thin margins and intense competition, resulting in limited pricing flexibility and achieving profitability is highly dependent on efficient procurement, inventory management, and operational efficiencies. Accordingly, the group's operating margin remained modest at 1.90 percent in FY26 (2.20 percent in FY25). However, the absolute EBITDA levels has shown improvement that stood at Rs. 64.28 Cr. in FY26 as against Rs. 50.21 Cr. in FY25 and Rs. 38.31 Cr. in FY24. Further, the group's profitability remains susceptible to fluctuations in edible oil prices, which are influenced by global demand-supply dynamics, changes in prices of competing edible oils, and government interventions such as revisions in the minimum support price (MSP) for oilseeds. Additionally, the fragmented nature of the industry, with the presence of numerous small and unorganized participants across the value chain, continues to exert pressure on margins. Hence, the group's ability to sustain profitability amid volatile input prices and a competitive operating environment remains a key rating sensitivity.
Foray into new B2C business segment
The group entered the wellness supplements, nutraceuticals, and personal care segment in FY25 through its consumer-facing brand, NEAT Everyday, marking its foray into B2C market. The product portfolio consists of over 100 SKUs, including cold-pressed oils, soft gel capsules, gummies, rose water, aloe vera gel, and other wellness products. The sales are primarily routed through the company's website, e-commerce and quick-commerce platforms. Further, in June 2026, the group expanded its retail presence by launching 12 exclusive brand outlets across Ahmedabad, Mumbai, and Indore under the company-owned company-operated (COCO) model, with plans to scale up to nearly 100 stores by FY28. This segment reported a revenue of ~Rs. 2 Cr. in FY26 with a cash burn of around Rs. 3.5 Cr. on account of higher marketing spends in order to establish the brand and is expected to further moderate the EBITDA margins of the group in FY27 owing to high promotional and marketing spends. However, the management envisages to achieve breakeven for this segment by FY28. While this segment provides diversification benefits and scope for margin expansion, its ability to successfully scale operations, establish brand acceptance, and achieve the projected milestones remains a key monitorable.
Exposure to inherent risks in agro-based business along with foreign exchange fluctuation risk and regulatory risks
The group remains exposed to inherent risks associated with the agro-commodity sector, with raw material availability dependent on factors such as crop yield, monsoon conditions, and acreage under cultivation. While oilseeds are primarily sourced domestically, degummed and crude oils are procured through imports, exposing the group to supply and price volatility. However, the group mitigates these risks to an extent through established relationships with their stakeholders and using forward contracts for commodity price hedging. Additionally, given its reliance on imported inputs, the group remains exposed to foreign currency fluctuations; however, this risk is mitigated to some extent through a prudent hedging strategy involving forward contracts. Further, the group's operations are susceptible to changes in government regulations, including revisions in import duties and other policy measures relating to oilseeds, imported crude and refined edible oils which remain key rating monitorable.
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