­Established track record and a healthy order book ensuring revenue visibility for the medium term
SLMI and its promoters’ long-standing presence in the civil construction industry manifests the company’s established track record of operations and the extensive experience of its promoters. The promoters have 30 years of individual experience in the infrastructure construction industry. Since inception, SLMI has been executing projects floated through tenders by the government and civic bodies in Telangana. By pursuing numerous orders for its key principals for more than two decades, SLMI is presently registered as a special Class I contractor with the Roads and Bridges (R&B) division in Telangana. The promoter's extensive industry experience, established track record, and timely execution of past projects have enabled SLMI to establish long-standing relationships with its key suppliers and principals. Currently, SLMI has orders worth Rs. 723.52 Cr, which are to be executed in the next 12–36 months. While 100% of the order book value pertaining to the Telangana region, posing a geographical concentration risk on the revenue profile of the company. However, the geographical concentration risk is mitigated to some extent by timely receivables, as the company only undertakes projects funded by the central or state government. Acuite believes that extensive experience of the promoters and strong order book of the company will aid SLMI business risk profile over the medium term.

Moderate financial risk profile:
The financial risk profile of SIPL remained moderate marked by healthy net worth, low gearing and moderate debt protection metrics. The net worth stood at Rs.96.17 Cr. as on March 31, 2025 against Rs.95.01 Cr. as on March 31, 2024. This marginal improvement in net worth is due to accretion of profits during the year. The company’s debt level (comprising long-term debt of Rs.8.79 Cr, unsecured loans (USL) of Rs.0.27 Cr, short-term debt of Rs.17.50 Cr. and current maturities of long-term debt of Rs.4.33 Cr.) reduced to Rs.30.89 Cr. as on March 31, 2025 from Rs.34.65 Cr. as on March 31, 2024. With the decline in total debt levels, the company’s leverage structure remained healthy with low gearing level and total outside liabilities to tangible net worth (TOL/TNW) of 0.32 times and 0.61 times as on March 31, 2025 against 0.36 times and 0.74 times as on March 31, 2024 respectively.

The debt protection metrics have deteriorated due to decline in profitability but remained moderate, with a debt service coverage ratio (DSCR) and interest coverage ratio (ICR) of 1.24 times and 2.51 times respectively as on March 31, 2025 compared to 3.41 times and 4.44 times respectively as on March 31, 2024. Acuite believes that financial risk profile of SIPL will remain similar over the medium term because of conservative leverage policy followed by the company. 

­Sharp decline in operating performance
The company registered revenue of Rs.124.62 Cr. in FY2025, declined from Rs.208.01 Cr. in FY2024. This sharp decline in revenue is due to delay in execution because of procedural delays and temporary disruptions in fund allocation. However, during the H1FY2026 the company registered revenue of Rs.56.00 Cr. against Rs.40.68 Cr. registered during H1FY2025, showing signs of recovery and estimated to close the year with revenue range of Rs.180-190 Cr. Consequently, operating profit (in absolute terms) has also declined to Rs.14.15 Cr. in FY2025 from Rs.23.46 Cr. in FY2024, However the margin has remained stable at 11.35 percent in FY2025 against 11.28 percent in FY2024. Further, the PAT margin declined to 0.94 percent in FY2025 from 3.78 percent in FY2024 due to loss on exceptional items such of written off of advances given to subcontractors. Acuite believes, the operating performance of the company will improve in the near-term backed by presence of moderate order book, while margins are expected to remain at similar levels.

Intensive nature of working capital operations:
SIPL’s operations are working capital intensive in nature as reflected by its gross current asset (GCA) of 294 days in FY2025 compared to 204 days in FY2024. The elongation in GCA days in due to stretch in inventory days, which primarily consists of work-in-progress. The company has around Rs.39.13 Cr. work in progress as on March 31, 2025, resulting in inventory days of 129 days for FY2025 against 78 days in FY2024. The GCA also includes the high amounts of advances to contractors and suppliers in form of other current assets, which further elongating the GCA level. The debtor days stood at 42 day in FY2025 against 67 days in FY2024. The company pays the material suppliers within 30 days. However, certain portion of creditors pertains to expenses payable to sub-contractors, resulting in creditor days of 126 days in FY2025 against 141 days in FY2024. The presence of huge amounts of work-in progress as on March 31, 2025 resulted in high dependency on fund based working capital limits, which were utilized at an average of ~93 percent over the past 12 months ending August, 2025. Acuite expects the operation of the company to remain working capital intensive on account of high work-in progress levels.

High geographical and customer concentration risk on the revenue profile:
Currently, SIPL has orders worth Rs.723.52 Cr. from ministry of road transport and highways, which are to be executed in the 12-36 months. This draws significant customer concentration risk on the revenue profile. Besides, 100% of the order book value pertaining to Telangana region which draws significant geographical concentration risk on the revenue profile of the company. However, the geographical concentration risk is mitigated to some extent by timely receivables, as the company only undertakes those projects which are specially funded by the Central or state government.

Tender-based nature of operations and competitive industry:
SLMI is engaged in bidding for tenders in the infrastructure segment, which is marked by the presence of several mid- to large-sized players; hence, the company faces intense competition from other players in the sector. The risk becomes more pronounced as tendering is based on a minimum amount of bidding for contracts. The company acquires tenders at competitive prices, which may affect its profitability. There are uncertainties attached to the allotment of tenders. However, the risk is mitigated to some extent, given the promoter's experience of more than two decades in the industry, which has enabled the company to procure tenders on a regular basis.