Experienced promoters and long track record of operations
The company has an established track record in the iron and steel industry for more than 17 years. Further, the key promoter of the company, Mr. Pawan Kumar Gupta has an experience of around two decades in the iron and steel industry, leading to better understanding of the local market dynamics and healthy relationships with customers and suppliers. Currently, day to-day operations are being managed by Pawan Kumar Gupta, Hemant Gupta and Rahul Agarwal, supported by a team of experienced professionals. Acuite believes that the long track record of operations will benefit the company going forward, resulting in steady growth in the scale of operations.
Stable operating performance albeit volatile revenues
The revenues stood at Rs. 358.35 crore in FY2025(Prov.) as against Rs. 468.63 crore in FY24 and Rs. 388.43 Cr. in FY2023. The volatility in revenue is due to a decline in the quantity sold and low-price realisations. In H1FY2026, the company recorded the revenue of Rs. 167.00 Cr. The EBITDA margins of the company stood at 5.86 percent in FY2025 (Prov.) as compared to 5.67 percent in FY24. The slight improvement was on account of a moderation in the raw material prices. The PAT margin stood at 2.16 per cent in FY2025(Prov.) as compared to 2.71 per cent in FY2024. The operating performance would remain steady on the back of improvement in operating environment. In addition to this, the company has a locational advantage as the plants are located in the industrial area of Odisha, which is near various steel plants and sources of raw materials. Going forward, improvement in production & sales volumes coupled with realisation growth shall be a key rating monitorable.
Moderate financial risk profile
The financial risk profile of the company remained moderate marked by moderate net worth, average debt protection metrics and moderate gearing ratio. The net worth of the company stood at Rs. 73.91 crore as on March 31, 2025 (Prov.) as against Rs. 66.17 crore in as on March 31, 2024. The increase in net worth is majorly due to accretion of profit to the reserves. The gearing (debt-equity) stood at 1.14 times in FY2025 (Prov.) as against 1.08 times in FY2024. The company has total debt increased to Rs. 84.17 crore as on March 31, 2025 (Prov.) as compared to Rs. 71.77 crore as on March 31, 2024. The debt protection metrics of the company remained moderate with Interest Coverage Ratio (ICR) of 2.62 times and Debt Service Coverage Ratio (DSCR) at 1.96 times in FY2025 (Prov.) as compared to 3.78 times and 2.77 times in FY2024 respectively. Acuite believes that going forward the financial risk profile of the company will remain in similar levels over the medium term, in the absence of any major debt funded capex plans.
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| Moderately intensive working capital operations
The company’s working capital operations remains highly intensive, as reflected in the deteriorated Gross Current Assets (GCA) of 138 days in FY25 (Prov.) as against 88 days in FY24. The inventory days stood at 103 days in FY25 (Prov.) and 66 day in FY24. Further, the debtor days stood at around 13 days in FY25 (Prov.) against 12 days in FY24. The creditor days of the firm stood at 18 days for FY25 (Prov.) compared against 10 days for FY24. The average bank limit utilisation for fund-based limits stood at ~77.63 percent (IndusInd Bank Limited) and ~36.95 percent for the last six months ended September 2025. Acuite believes that the working capital operations of the company will remain at the same level in near to medium term due to nature of operations.
Susceptibility of profitability to volatility in raw material prices, Intense competition and inherent cyclical nature of the steel industry
The downstream steel industry remains heavily fragmented and unorganized. The firm is exposed to intense competitive pressures from large number of organized and unorganized players along with its exposure to inherent cyclical nature of the steel industry. Additionally, prices of raw materials and products are highly volatile in nature. Moreover, the government’s emphasis on steel-intensive sectors like railways and infrastructure increases vulnerability; any prolonged drop in demand would negatively affect the company’s performance. Furthermore, the fluctuation in prices of raw materials and goods is considerably unstable. While any major fluctuation in prices can be passed on to the customers with a lag, the company would remain exposed to volatility in raw material prices in case of weak demand. Acuite believes that the company remains exposed to such cyclicality and competition in the steel industry is reflected from volatility to its operating margins.
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