­Established track record, extensive industry experience of the promoters
SIL has been a part of AM International group since 2006 and is headquartered in Chennai, India. AM International Group, founded and chaired by Mr. Ashwin Muthiah is a Singapore-based conglomerate with diversified operations across multiple sectors, including Fertilizers & Supply Chain, Petrochemicals, Infrastructure Services, Medtech and Green Solutions. The group operates across eight countries in South East Asia, South Asia, West Asia and Europe. SIL is engaged in trading of building material and Power & Control Systems, and also manufactures drums, cables, boat building and specialty chemicals. SIL is a single point of contact for supplying the building materials and  has a network of 15 sales offices cum warehouses across India. Its widespread presence allows for geographical and product diversification, enabling SIL to cater to regional demand fluctuations, expand its client base, improve price realization and ensure steady business growth. SIL sources materials from various manufacturers including Tata Steel BSL Ltd, Jindal Pipes Limited, Tata Steel Limited, Jindal Steel & Power Ltd, , Apl Apollo Tubes Ltd, Jindal (India) Limited, Finolex Cables Limited, Bhushan Power & Steel Limited, Maharashtra Seamless Limited. Its customer base includes contractors, builders and industrial buyers. Acuité believes that the well-experienced directors and professional and experienced management in the building material supply industry, established relations with its stake holder's shall enable its future growth.

Improvement in revenue and profitability:
SIL’s recorded a revenue growth of 8.71 percent in FY2024, registering Rs.476.96 Cr. compared to Rs.438.74 Cr. in FY2023. The growth in revenue was primarily driven by improved realizations in trading segment, particularly in building materials. The operating profit margin improved marginally to 3.61 percent in FY2024 from 3.41 percent in FY2023. However, the PAT margin declined to 1.88 percent in FY2024, from an exceptional high 3.90 percent in FY2023, which was due to the reversal of advances written off. In 9MFY2025, SIL reported revenue of Rs.402.94 Cr. posting a growth rate of 11.7 percent, compared to Rs.306.65 Cr. in 9MFY2024. This revenue growth is attributed to increase in orders for building materials in trading segment. Additionally, the operating profit margin improved to 4.34 percent in 9MFY2025 from 3.45 percent in 9MFY2024, owing to improved  realizations. Acuite believes, SIL’s revenue will continue to improve steadily on account of increasing orders with operating profit margins expected to remain within the range of 3.5-4.5 percent.

Healthy financial risk profile:
SIL’s financial risk profile remains healthy marked by healthy networth, below unity gearing and healthy debt protection metrics. The networth of the company stood at Rs.430.60 Cr. as on March 31, 2024 compared to Rs.414.27 Cr. The improvement in networth is due to increase in other comprehensive income reserve coupled with the accretion of profits to the reserves. The overall debt levels, which solely consist of working capital debt, declined to Rs.41.90 Cr. as on March 31, 2024 from Rs.47.62 Cr. as on March 31, 2023. The gearing levels remained low at 0.10 times. Further, the total outside liabilities to tangible networth (TOL/TNW) also remained low at 0.18 times as on March 31, 2024 against 0.17 times as on March 31, 2023. The company’s gearing is expected to remain low over the medium term on account of absence of any debt funded capex plans. The debt protection metrics stood healthy with DSCR and ICR of 3.56 times and 4.17 times respectively as on March 31, 2024 compared to 6.24 times and 6.85 times respectively as on March 31, 2023. Debt to EBITDA has deteriorated marginally, yet remained healthy at 1.84 times as on March 31, 2024 against 1.56 times as on March 31, 2023. Acuite believes that the financial risk profile of the company will remain healthy over the medium term, supported by healthy accruals, nil long-term debt and adequate liquidity with no significant debt-funded capex plans in near future.

Moderately intensive nature of working capital operations:
The company's working capital is moderately intensive in nature as reflected in its Gross Current Asset (GCA) days of around 147 days in FY2024. SIL offers credit period of around 45 -60 days to its customers while making upfront payments to most of its suppliers through its fund based working capital facilities, resulting in creditor days of less than 10 days’. The company’s inventory days stood at 51 days in FY2024 against 57 days in FY2023. The company’s utilisation of  working capital limits is moderate at about 36 per cent for last 6 months ending January, 2025. Acuité believes that given the competitive and trading nature of its operations, the company needs to maintain inventory while offering credit resulting in moderately intensive working capital requirement.

Thin profit margins and intense competition in a fragmented and commoditised market
SIL’s operating profit margin remains modest due to limited value addition and the intensely competitive nature of the business. Despite an expected improvement in FY2025 due to inventory gains, the operating margin is expected to remain in the range of 4-5% in the near-to-medium term. The company is engaged in trading of building materials such as Steel Pipes, Steel, PVC Pipes, Cables, Power & Control Equipment, Spares and others. As the market is highly fragmented and commoditised, SIL faces price-based competition which continues to constraint its operating profitability.