Sound Business profile
Skipper Limited incorporated in 1981 by Bansal family as Skipper Investments Limited and engaged into manufacturing of poles and towers. Currently the company is managed by an experienced management which includes Mr. Sajan Kumar Bansal who has more than 3 decades of experience in same line of business  and ably supported by his three sons and qualified personnel. The long track record of operations and expertise has enabled the company to enjoy dominant market share in T&D tower manufacturing business. The company has diversified its business through manufacturing of PVC pipes and executes certain EPC contracts. Presently company has a presence across 30 nations which include Asia, South American, Middle East and African nations. In FY22, the sale from overseas markets contributed to 23 percent of total revenue and 77 percent from domestic market. Further the company has an extensive distribution channel of 25,000 retail touch points in Eastern and Northeastern India for its polymer division. The company has a strong customer base which includes power transmission & distribution companies, EPC contractors, telecom companies and Indian Railways. SL caters to reputed companies such as Reliance Jio, Power Grid Corporation India Limited (PGCIL), Tata Projects among others.
 
Healthy order book
SL has a healthy existing order book of Rs 2097 Cr and Rs 10,000 Cr of orders are pipeline as on 30 June 2022. Nearly 86 percent of existing order book belongs to power transmission & distribution (T&D) sector out of which 39 percent of orders are from domestic power transmission & distribution companies and remaining 47 percent from export markets. The company had secured fresh orders of Rs 1648 Cr in FY22 as against Rs 875 Cr in FY21 because of increased order flow from overseas markets. The order flow from overseas markets stood at Rs 744 Cr in FY22 in comparison to Rs 288 Cr in FY21. In addition, the company has bagged fresh order worth of Rs 225 Cr in Q2FY23. Hence the outstanding order book provides near to medium term revenue visibility. The company is planning to diversify its presence through bidding for large volume of orders from developed market (currently company is pursuing international orders of Rs 4500 Cr out of the total orders in pipeline) which will further improve the order flow over the medium term.

Sustained revenue growth
The scale of operation has witnessed sustained improvement as the company has registered 7.98 percent of revenue growth in FY22 as against 13.74 percent in FY21 and 25.68 percent of degrowth in FY20.The improvement is driven by continuous increase in revenue contribution from polymer division on account of expansion of distribution channel along with introduction of new products in the plumbing segment. The healthy execution of orders led to increase in revenue from engineering division. Moreover, the company has registered a revenue of Rs 416 Cr in Q1FY23 as against Rs 274 Cr in Q1FY22 and Rs 220 Cr in Q1FY21.Acuité believes the scale of operation will continue to revenue growth over medium term backed by rise in order flow from overseas markets.
 
Healthy financial risk profile
The financial risk profile is marked by its strong net worth, low gearing ratio and modest debt protection metrics. The net worth of the company stood at Rs. 734 Cr. as on 31st March’2022 as compared to Rs 706 Cr. in the previous year. The gearing ratio of the company stood at 0.77 times in FY22 as against 0.62 times in FY21.The company’s debt profile comprises 50 percent of long-term borrowing and remaining 50 percent of short term borrowing. TOL/TNW stood at 1.84 times in FY22 as against 1.71 times in FY21. Interest coverage and DSCR stood at 1.84 times and 1.12 times in FY22 as against 2.02 times and 1.21 times in FY21 respectively. The moderation in coverage ratio is on account of rise in financial cost due to rise in debt level. Rise in debt level is mainly on account of addition of fresh term loans. NCA/TD stood at 0.14 times in FY22 as against 0.15 times in FY21. Going forward, Acuité believes the financial risk profile will improve over the medium term due to gradual repayment of term loans and absence of any large debt funded capex plan.

Stable profit margin
The company has stable profit margin as EBITDA margin stood at 9.92 percent in FY22 as against 9.20 percent in FY21. Profitability margin of both engineering and polymer divisions had improved during FY22 because of fixed cost absorption and execution of fresh contracts where margins are higher in comparison old fixed price contract. Acuite expects the profit margin is likely to sustain at current level in FY23 because of correction in metal prices during H1FY23.

Working capital intensive operations
The operations of SL are working capital intensive as reflected in their Gross Current Asset (GCA) days of 288 days in FY22 as compared to 275 days in the previous year. The high GCA days are mainly on account of high unsold inventory of finished goods and stretched receivables from power transmission entities. Acuité expects the GCA days to hover around same levels over the medium term on account of the nature of operations of the entity.