­Established track record of operation and experienced management
The company has a long execution track record of more than two decades supported by experience of its directors in the iron and steel industry. Therefore, the company has a long presence in this sector and has established a healthy relationship with customers of more than a decade.

Healthy financial risk profile
While the net worth of the company stood moderate and improved from Rs.39.63 Cr. in FY2024 to Rs.42.17 Cr. in FY2025 owing to profit accretion, the company’s policy of minimal reliance on external debt has kept the gearing healthy at 0.04 times in FY2025 (0.05 times in FY24). Further, the coverage indicators moderated with interest coverage ratio at 2.55 times in FY2025 (232.97 times in FY2024) on account of increase in the finance cost which includes one-time interest obligations settlement payment of ~Rs.2.3 Cr. made to Haryana State Industrial & Infrastructure Development Corporation Ltd (HSIIDC) over a long-standing price enhancement issue related to land purchased from HSIIDC. However, the same is expected to normalise from the next year.

Going forward, Acuite believes the financial risk profile of the company will continue to remain healthy on account of steady business accruals minimal reliance on external debt.

Moderate working capital operations
MCILs working capital operations are moderate in nature marked by moderate gross current asset days of 86 days in FY2025 against 77 days in FY2024. The debtor days stood at 51 days in FY2025 against 62 days in FY2024. The company generally gives credit period of 30-60 days to its customers. The creditor days stood at 4 days in FY2025 against 1 day in FY2024. The company generally pays advance to its major supplier i.e., Tata Steel Limited (~46% of the total raw material purchased) and gets credit period of 5 days from other suppliers. The company relies less on its working capital limits from banks and utilises its liquid investments to meet working capital requirements.

Going ahead, the working capital operations are expected to remain moderate over the medium term.

Moderating revenues along with stagnant profitability
MCIL’s operating revenue is declining on y-o-y basis and stood at Rs.160.25 Cr. in FY2025 against Rs.168.41 Cr. in FY2024 and Rs.170.40 Cr. in FY2023. This decline reflects the broader challenges faced by the steel industry during the year, including intensified competition, fluctuations in global steel prices, and a slowdown in demand across key domestic and international markets. The operating profit margin improved to 3.31% in FY2025 against 1.92% in FY2024 primarily on account of fluctuation in the raw material prices owing to company’s ability to pass on the same to its customers. However, the PAT margin stood stagnant in FY2025 & FY2024 at 1.48% primarily attributable to an increase in finance costs, which exerted downward pressure on the bottom line in FY2025.

­Exposure to volatility in raw material prices
MCIL's cash flows are susceptible to movement in the steel prices. The raw material costs of the company consist of ~ 81-85 per cent  of the total revenue. Further, on account of its moderate size and highly fragmented industry, adverse price movements in the steel and metal market can result in severe deterioration in MCIL's profitability margin and debt protection metrics.