Experienced Management
SVIAIL has a long operational track record of 15 years in the sponge iron manufacturing business. Prior to SVIAIL, the promoters Mr. Kamal Kumar Agrawal, Mr. Ankit Kedia, Mr. Sushil Kumar Agrawal, Mr. Pawan Kumar Lohia, Mr. Mishank Kedia and Mr. Barun Singh were engaged in trading of sponge iron. The long track record and the experience of the management have helped the company to build a healthy relationship with customers and suppliers. Acuité believes that SVIAIL will sustain its existing business profile on the back of established track record of operations and experienced management.

Increase in operating income during FY25 and sustained trend in 7MFY26
The operating income has increased by 11% and stood at Rs.269.84 Cr. in FY25 as against Rs. 243.88 crore in FY2024. The growth in revenue was primarily driven by sales volumes, while the average selling price remained stable during the period. The capacity utilization remained in the range of 75-77% dependent on quality of raw materials. Further the company has achieved Rs.153.96 Cr. till October 2025. Acuité believes that the scale of operations will improve marginally and remain stable over the medium term.

Healthy Financial Risk Profile 
The financial risk profile of the company is marked by healthy capital structure and robust debt protection metrics. The net worth of the company stood healthy at Rs. 126.87 crore in FY2025 as against Rs.111.56 crore in FY2024 due to accretion to reserves. Further, Acuite has also considered unsecured loan of Rs. 1.44 crore from the promoters as on March 31,2025 as quasi equity, as the same amount is subordinated to bank debt. The gearing remains below unity and stood at 0.07 times in FY25 as against 0.09 times in FY24. Despite debt funded capex plan, the gearing of the company is expected to be stable due to internal accrual generation. Interest Coverage Ratio (ICR) stood at 21.97 times in FY2025 as against 33.27 times in FY2024. The debt service coverage ratio (DSCR) stood at 17.14 times in FY2025 as against 25.86 times in FY2024. Acuite believes that the financial risk profile will continue to remain on similar levels backed by comfortable capital structure and absence of any major debt.

Decline in profitability margins
The operating margin has declined to 7.85 percent in FY2025 from 8.58 percent in FY2024 due to increase in the raw material costs which could not be passed on to its customers due to stable sponge iron prices. The PAT margin reduced to 5.66 percent in FY2025 from 7.06 percent in FY2024. Further EBITDA and PAT margins stood at 7.99% and 5.21% respectively till October 2025. Acuité believes, that the profitability margin of the company will be sustained at similar levels over the medium term but will be monitorable.

Intensive Working Capital Cycle 
The working capital cycle remains intensive as reflected from GCA days of 173 days in FY25 as against 180 days in FY24. Inventory days have improved and stood at 29 days in FY2025 as against 44 days in FY2024. The company remains exposed to the inherent cyclicality of the iron sector, which influences its inventory management policy. To mitigate procurement time associated with auctions of iron ore, the company maintains a minimum inventory of two months. Debtor days stood at 36 days in FY2025 as against 30 days in FY2024. The credit terms with customers are ~45 to 60 days but may vary depending on the quantity and nature of orders. The other current assets majorly include advances to suppliers of Rs.73.14 Cr, advances with revenue authorities of Rs.5.86 Cr. and others. The creditor days stood at 32 days in FY2025 as compared to 28 days in FY2024. Acuite believes that the working capital cycle is likely to remain at similar levels over the medium term.

Cyclical nature of the iron and steel industry and the vulnerability of the margins to the volatility in steel prices
The company faces strong competitive forces from both organized and unorganized participants, compounded by the cyclicality inherent in the steel industry. Moreover, the government’s emphasis on steel-intensive sectors like railways and infrastructure increases vulnerability; any prolonged drop in demand would negatively affect steel group’s performance. Furthermore, the fluctuation in prices of raw materials and goods is considerably unstable. The business also contends with rivalry from more affordable imports from Indonesia and China. A substantial rise in imports could detrimentally affect earnings and quantities, making this a crucial aspect to watch. The moderation in operating margin of the company was witnessed in FY 2025 where it stood declined to 7.85 percent as compared to 8.58 percent in FY2024. Acuite believes that the susceptibility of the company’s profitability due to presence in cyclical steel industry would continue to remain over the medium term.