| Established track record of operations with experienced promoters
Being in the industry for more than three decades, NLPL has established a significant track of operations in the domestic and international markets. The company exports its products to various geographical locations like China, Austria, Spain, Japan, Singapore, etc which contributed to ~15 percent to the total sales in FY25. Further, one of the shareholder of NLPL i.e. NACL Industries Limited holding 26 percent stake in the company has been majorly acquired by Coromandel International Ltd i.e a leading agrochemical company. This change shall provide better market opportunities to the company and enhance its scale of operations. Further, the director of the company, Mr. Goutham Gottumukkala RK Raju has an experience of over 15 years in the chemical and bulk drug industry, along with Mr. YP Rao, a technical advisor of the company, who is a renowned specialist in process design and optimization with more than 35 years of experience in the bulk drugs industry. Therefore, the extensive experience of the management has helped the company to establish healthy relationships with their suppliers and customers. Acuité believes that the diversified product portfolio and long-standing experience of the management shall continue to benefit the company going forward, resulting in steady growth in the scale of operations.
Steady growth in revenues albeit moderation in profitability
NLPL achieved revenue of Rs.151.06 Cr in FY2026(Prov.) with resulted in YOY growth of 11.86 percent as against Rs. 135.05 Cr in FY2025. The stable growth in revenue from operations was majorly on account of stable demand for its well-diversified product portfolio, especially in the pharmaceutical industry. Operating margin stood at 9.54 percent in FY2026(Prov.) as against 10.75 percent in FY2025. The moderation in margin on account of increase in the raw material cost. The PAT margin stood at 3.15 per cent in FY2026(Prov.) as against 4.22 per cent in FY2025. Acuité believes that the company's ability to further scale up its operations will remain a key rating sensitivity factor over the medium term.
Moderate financial risk profile
The financial risk profile of the company remained moderate, marked by moderate net worth, debt protection metrics, and low gearing. The net worth of the company stood at Rs.88.43 Cr. and Rs.77.42 Cr. as on March 31, 2026(Prov.), and 2025 respectively. The improvement is on account of the on account of accretion of profits to reserves and partial receipt of insurance claim in FY2026. The gearing of the company stood at 0.65 times as on March 31, 2026(Prov.), against 0.70 times as on March 31, 2025. Debt protection metrics – Interest coverage ratio and debt service coverage ratio stood at 2.56 times and 1.81 times as on March 31, 2026(Prov), respectively as against 2.59 times and 1.70 times as on March 31, 2025, respectively. TOL/TNW (Total outside liabilities/Total net worth) stood at 1.26 times and 1.32 times as on March 31, 2026(Prov.) and 2025 respectively. The debt to EBITDA of the company stood high at 3.88 times as on March 31, 2026 (Prov.), as against 2.88 times as on March 31, 2025. Acuité believes that the financial risk profile will remain moderate in the absence of any major debt funded capital expenditure plan in the near term.
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Intensive working capital operations
Company’s working capital operations are intensive in nature as reflected in its gross current assets (GCA) of 249 days in FY2026(Prov.), compared to 241 days in FY2025, majorly driven by the high inventory days. which stood at 193 days as on March 31, 2026 (Prov.) as compared to 199 days as on March 31, 2025. The company needs to maintain higher inventory levels owing to diversified product portfolio and availability of limited production reactors wherein the company needs to thoroughly clean the reactors before starting production of other chemicals. The debtor days stood at 48 days in FY2026(Prov) as against 53 days in FY2025. The company provides an average credit period of 50-60 days to its customers. The creditor days stood at 134 days in FY2026(Prov.) as against 134 days in FY2025. High utilization in working capital limits at ~98 percent over the past five months ending in May 2026. Acuité expects the working capital operations of the group to remain intensive over the medium term on account of extended credit offered to the customers.
Susceptibility to volatility in raw material prices and cyclicality in the chemical industry
The company procures raw materials domestically (~85 percent) and from the global markets as well. The operating profitability remains partially susceptible to volatility in the prices of key raw materials, such as sodium metal, pyridine, etc. Further, the chemical industry is intensely competitive and dominated by large global players. The bulk drug and specialty chemical industry is also susceptible to regulatory changes and cyclicality in the industry. The revenue also constitutes export income which incurs foreign exchange currency risks; however, it gets naturally hedged against the imports and for the net forex exposure the company books the forward contracts. Any significant reduction in the demand and prices adversely impacting the operating margins and cash accruals of the company will remain a key monitorable.
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