| Experienced management and long track record of operations of the group in steel sector
The group has a long track record of operations of around three decades in the steel manufacturing industry. The promoters started with trading of steel since 1990 under Ajay Steels Private Limited and ventured into manufacturing of TMT bars in 2002 through the acquisition of Gourav Krishna Ispat Private Limited. The Group has been successful in turning around loss making companies through inorganic and brownfield expansion in a very short time frame. Currently, the group is managed by Mr. Rajesh Agrawal, Mr. Ramesh Agrawal and Mr. Umesh Agarwal, who possess business experience of around three decades in the steel industry, supported by second generation directors. Acuité believes that the vast experience of the promoter and the long track record has enabled the group to establish strong market position in Chhattisgarh and build healthy acceptability of its brand ‘GK TMT’ among large institutional clients as well as retail consumers.
Integrated steel player along with locational advantage
The group is an integrated steel player that manufactures sponge iron, MS Billets, wire, TMT bars and ferro alloys plant. The manufacturing units are in proximity to the sources of key raw materials, iron ore and coal, leading to relatively lower landed cost. Real Group has linkages with the National Mineral Development Corporation (NMDC) and the Southeastern Coalfields Limited (SECL) for procurement of iron ore and coal, respectively. Acuité believes that the vertical integration in operations will lend considerable operational efficiency going forward. Further, apart from supporting the operating profitability, the backward integration will also ensure smooth raw material availability.
Steady business risk profile
The revenue of the group stood at similar level at Rs. 3568.76 Cr. in FY2025 from Rs. 3541.62 Cr. in FY2024 supported by steady demand across its product portfolio, partially offset by subdued realizations, further, the group reported revenue of Rs. 3920 Cr. in FY26. The lower realisation was partially offset by lower raw material prices which led to slight moderation in operating margins of the group that stood at 9.41% in FY2025 compared to 9.76% in FY2024. Further, the group reported operating margin of ~11.06% in FY2026. The PAT margin stood at 5.68 per cent in FY2025 as compared to 7.22 per cent in FY2024. Acuité believes that going forward, the scale of operations and profitability margins of the group will improve steadily backed by the capacity additions over the medium term.
Moderately Efficient Working Capital Management
The group’s working capital operations remain moderately efficient, as reflected in a Gross Current Asset (GCA) of 139 days as on March 31, 2025, compared to 120 days as on March 31, 2024. The increase in GCA days during FY25 is primarily attributable to higher other current assets, largely comprising advances to suppliers. Debtor days continue to be efficiently managed, standing at 10 days as on March 31, 2025, in line with the previous year. Inventory days stood at 65 days as on March 31, 2025, from 53 days as on March 31, 2024. Creditor days stood at 25 days as on March 31, 2025, compared to 22 days as on March 31, 2024. The average utilisation of the fund-based limit stood low at 40.29% for twelve months ended as of December 2025. Acuité believes that the working capital operations of the group would be managed efficiently over the medium term backed by efficient collection mechanism and inventory management.
Strong Financial Risk Profile
The group’s financial risk profile continues to remain strong marked by high net worth base, low gearing and strong debt protection metrics. The tangible net worth of the group improved to Rs. 1664.14 Cr. as on 31st March 2025 as against Rs. 1473.33 Cr. as on 31st March 2024 majorly due to healthy accretion to reserves while the reduction in equity share capital reflects the redemption of preference share capital. The group follows a conservative leverage policy as reflected by its gearing (Debt to equity ratio) of 0.33 times as on March 31, 2025, against 0.15 times as on March 31, 2024. The Group’s total debt increased to Rs. 557.30 crore as of March 31, 2025, compared to Rs. 226.56 crore as of March 31, 2024. This rise in long term debt is primarily attributable to the drawdown of term loans for reimbursement of completed capital expenditure. The debt protection metrics of the group stood strong marked by Interest Coverage Ratio (ICR) at 20.86 times and Debt Service Coverage Ratio (DSCR) at 16.77 times as on March 31, 2025. Further, debt to EBITDA stood at comfortable 1.58 times in FY2025.
The Group is in the process of setting up a 100 MW captive solar power plant for its own consumption, with an estimated project cost of approximately Rs. 325 crores. Of the total cost, around Rs. 225 crore is expected to be funded through term loans to be availed in FY2027, while the balance will be financed through internal accruals. The project is anticipated to commence operations by January 2028.
In addition, the Group has drawn a term loan of Rs. 125 crores in FY2026 towards reimbursement of completed capital expenditure. These borrowings are expected to result in an increase in the Group’s overall debt levels while moderating coverage indicators. However, Acuité expects the financial risk profile to remain strong despite debt funded capital expenditure which would continue to be supported by accretion of healthy cash accruals over the medium term.
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