Acuité has consolidated the financial and business risk profile of L N Metallics Private Limited (LNML) and P D Industries Private Limited (PDIPL). The group is herein referred to as the LN Group on account of common management and similar line of operations.

Experienced management and a long track record of operation
The group has an established presence in the iron and steel industry and is supported by the extensive experience of its promoters, Mr. Girdharilal Agarwal, and Mr. Ramesh Agarwal, who collectively possess over 15 years of industry experience. The group's stable business profile is supported by the promoters' extensive industry experience and established customer relationships, with several customers associated with the group for more than a decade.
Acuité believes that the group's business risk profile will continue to benefit from its experienced management and established customer relationships over the medium term.

Improving Scale of operations
The operating income has remained steady by ~1.2% and stood at Rs. 316.91 Cr. in FY2026 (Prov.) as against Rs. 312.45 Cr. in FY2025, supported by, increased sales volume of sponge iron, increased contribution from value added products (MS billet) from July 2025 onwards albeit decline in realisation. Further, revenue is expected to improve in FY2027, aided by the addition of a new furnace, which is estimated to generate incremental revenue for the group. The EBITDA margin stood to 9.24 percent in FY2026 (Prov.) as against 8.02 percent in FY2025. The improvement in margin is on account of decrease in raw material costs incurred during the year. Further, the commissioning of an 8 MW solar power plant (part 1) is expected to reduce dependence on external power sources and support operating efficiencies. The PAT margin improved to 7.04 percent in FY2026 (Prov.) from 5.50 percent in FY2025.
Acuite believes that the scale of operations will increase over the medium term due to capex being incurred which will lead to improvement in operating efficiency and also help in increasing revenue.

Healthy Financial Risk Profile
The financial risk profile of the group is marked by healthy net worth, gearing below unity and comfortable debt protection metrics. The net worth of the group stood at Rs.135.64 Cr. in FY2026 (Prov.) as against Rs.115.03 Cr. in FY2025 due to accretion of reserves. At a group level, buyback of shares has been undertaken within the family held groups to simplify the holding structure which was previously fragmented. The gearing (Debt-Equity) stood below unity at 0.42 times in FY26 (Prov.) as compared to 0.37 times in FY2025. The total debt of the group stood at Rs. 56.36 Cr. as on March 31, 2026 (Prov.), as against Rs. 42.29 Cr. as on March 31, 2025. The TOL/TNW of the group stood at 0.60 times as on 31 March 2026 (Prov.) as against 0.54 times as on 31 March 2025. The debt protection metrics of the group deteriorated yet remained comfortable as reflected by debt service coverage ratio of 7.93 times for FY2026 (Prov.) as against 10.81 times for FY2025 and interest coverage ratio stood at 8.75 times for FY2026 (Prov.) as against 13.74 times for FY2025. The Net Cash Accruals to Total debt stood at of 0.46 times for FY2026 (Prov.) compared to 0.48 times in the previous year.
Acuite believes that the financial risk profile will remain on similar levels over the medium term with minor moderation in gearing and debt protection metrices due to debt funded capex plans.

Moderately Intensive Working Capital Operations
The group has a moderately intensive working capital operation as reflected from Gross Current Assets (GCA days) of 138 days in FY2026 (Prov.) as against 102 days in FY2025. The GCA days are driven by higher inventory cycle. The inventory days increased and stood at 112 days in FY2026 (Prov.) as against 55 days in FY2025. Inventory days increased in FY2026 due to higher procurement of raw materials at favourable prices. Additionally, the inventory levels are adjusted in response to the fluctuations in market prices. The debtor days stood at 10 days in FY2026 (Prov.) as against 11 days in FY2025. The group collects payment on advance basis from its customers or, it extends a short credit period of 7 to 15 days. The creditor days stood at 15 days in FY2026 (Prov.) as against 11 days in FY2025. Iron ore is purchased from NMDC (National Mineral Development Corporation) and coal from BCCL (Bharat Coking Coal Limited) and Coal India Limited. All raw material purchases are made against advance payment.
Acuite believes that the working capital cycle of the group will remain at similar levels over the medium term.

Intense competition and inherent cyclical nature of the steel industry
The downstream steel industry remains heavily fragmented and unorganized. Raw material consumption is the single largest cost component for the secondary players in iron and steel industry. The group does not have backward integration for its raw materials which are purchased from manufacturers and traders located in Orissa and Chhattisgarh. The company 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.
Acuite believes that the group remains exposed to such cyclicality and competition in the steel industry is reflected from volatility to its operating margins.

• Increase in revenue by 50% while maintaining profitability margins.
• Improvement in financial risk profile with overall gearing remaining below ~0.50x on a sustained basis.
• Strengthening of liquidity position supported by higher cash accruals and healthy coverage of debt obligations.

• Decline in scale of operations or moderation in profitability margins on a sustained basis.
• Deterioration in debt protection metrics with DSCR falling below ~3.00x.
• Further elongation in working capital cycle.
• Larger than expected capex.