Healthy Financial Risk Profile
The financial risk profile of the group is marked by moderate net worth, gearing below unity and healthy debt protection metrics. The net worth of the group stood at Rs.115.03 Cr in FY25 as against Rs.100.58 crore in FY 2024 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. The gearing stood below unity at 0.37 times in FY25 as compared to 0.20 times in FY2024. Interest coverage ratio stood at 13.73 times and debt service coverage ratio stood at 10.81 times during FY25. Acuite believes the financial risk profile of the group will remain on similar levels on account of no major debt funded capex plan.

Moderate Working Capital Cycle
The group has a moderate working capital cycle as reflected from Gross Current Assets (GCA days) of 104 days in FY25 as against 80 days in FY2024. The inventory days stood at 54 days in FY25 as against 48 days in FY2023. The group maintains minimum inventory of 30 days of raw material. Additionally, the inventory levels are adjusted in response to the fluctuations in market prices.
The debtor days stood at 12 days in FY25 as against 10 days in FY24. The group offers credit terms to its customers ranging from 2 to 15 days and depending upon the nature of the relationship with each party and market demand. The creditor days stood at 10 days in FY25 as against 8 days in FY24. Iron ore is purchased through NMDC (National Mineral Development Corporation Ltd), and coal is purchased through Coal India Limited via long term linkages and auctions. These are backed by 100 percent advance payment. Acuite believes that the working capital cycle of the group will remain at similar levels over the medium term.

Stable operating income albeit decline in profitability margins during FY25
The operating income stood stable at Rs. 317.43 crore in FY2025 as against Rs. 309.89 crore in FY2024 backed by increase in sales volume albeit moderation in price realization. There has been downward trend in prices, which the group has effectively managed by increasing sales volume to support its topline growth. This approach demonstrates the adaptability in responding to market fluctuations while maintaining revenue stability.  The EBITDA margin stood to 7.88 percent in FY2025 as against 8.55 percent in FY2024. This margin depends upon the fluctuations in raw material prices and increase in power costs. The PAT margin stood at 5.41 percent in FY2025 as against 5.53 percent in FY2024. Acuite believes that the group will achieve on similar levels over the medium term depending on the fluctuations of market price.

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 Chattisgarh. 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.