Experienced management and established track record of operations
The company is managed by Mr. Rajesh Ramkumar Mittal, Mr. Rajat Rajesh Mittal, and Mrs. Preeti Rajesh Mittal, along with a team of experienced professionals. The directors bring over two decades of industry experience, which has contributed to the company’s long-standing operations and strong relationships with key suppliers and customers. Acuite believes the company will continue to benefit from its established presence, operational track record, and strong customer relationships.
Steady improvement in operating performance
RSTLs revenue has increased to Rs. 391.13 Cr. in FY2025 as against Rs. 327.57 Cr. in FY2024, primarily driven by higher sales volumes across both product segments while realisations have fallen during the year. The operating margin for FY2025 stood at 5.60 per cent, slightly lower than 5.71 per cent reported in FY2024, while the PAT margin improved to 1.94 per cent in FY2025 as compared to 1.47 per cent reported in FY2024. Acuite believes, the operating performance would improve steadily on the back of improved capacity utilisations.
Moderate Financial Risk Profile
The financial risk profile of the company remains moderate, marked by moderate net worth and gearing, along with average debt protection metrics. Acuite has considered Rs. 20.21 Cr. of unsecured loans (USL) as quasi equity. The net worth of the company increased to Rs. 82.22 Cr. as on March 31, 2025, from Rs. 77.37 Cr. as on March 31, 2024, primarily due to profit retention. The gearing level improved but remained moderate at 1.34 times as on March 31, 2025, compared to 1.45 times as on March 31, 2024. Debt protection metrics were average, with a debt service coverage ratio (DSCR) of 1.17 times in FY2025, compared to 0.73 times in the previous year. The Debt/EBITDA ratio stood high at 4.45 times as on March 31, 2025, against 5.26 times as on March 31, 2024. Net Cash Accruals to Total Debt (NCA/TD) stood at 0.10 times in FY2025, compared to 0.07 times in the previous year. Acuite believes the financial risk profile of the company is expected to improve to an extent, supported by the absence of any major debt-funded capex in the near term.
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Working capital intensive operations
The working capital operations of the company remained intensive marked by Gross Current Assets (GCA) of 160 days in FY2025 as compared to 177 days in FY2024. The debtor collection period stood at 58 days in FY2025, compared to 72 days in FY2024, with the average collection cycle ranging between 60 to 90 days. Inventory days declined to 90 in FY25 from 99 days in the previous year. Creditor days remained unchanged at 3 days in both FY2025 and FY2024, as most suppliers are paid in advance. Furthermore, the average utilization of fund-based working capital limits remained high, averaging around 99 per cent over the 12 months ending July 2025. Acuite believes that the working capital operations of RSTL may continue to remain intensive over the medium term on the back of nature of business.
Supplier Concentration Risk
The company is exposed to supplier concentration risk, with the top five suppliers accounting for approximately 69 per cent of total purchases. This indicates a high dependency on a limited group of vendors. Such concentration increases the company’s vulnerability to any adverse changes in the financial or business profiles of these key stakeholders, which could impact the operations and performance of RSTL. However, the risk is partially mitigated by the company’s long-standing relationships with its major suppliers. Acuite believes that the company’s ability to diversify its supplier base with favourable credit terms remains a key rating sensitivity.
Susceptibility of profit ability to competitive industry and fluctuations in raw material prices
The company operates in a highly competitive and fragmented industry characterised by low entry barriers, which results in intense competition from the large number of organised and unorganised players present in the downstream segment providing similar products and services. Hence, the bargaining power of the company remains low due to the competitive nature of the industry. Additionally, prices of raw materials and products are highly volatile in nature. Any volatility in the prices of the raw materials has a direct impact on the profitability margins of the company.
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