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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 24.16 | ACUITE BBB+ | Positive | Assigned | - |
| Bank Loan Ratings | 55.01 | ACUITE BBB+ | Positive | Reaffirmed | Stable to Positive | - |
| Bank Loan Ratings | 15.00 | - | ACUITE A2 | Reaffirmed |
| Total Outstanding | 94.17 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmation the long-term rating to ‘ACUITE BBB+’ (read as ACUITE triple B Plus) and the short-term rating from ‘ACUITE A2’ (read as ACUITE A Two) on the Rs. 70.01 crore bank facilities of Stesalit Limited (SL). The outlook is revised from 'Stable' to 'Positive'.
Further Acuite has assigned the long-term rating of ‘ACUITE BBB+’ (read as ACUITE triple B Plus) on the Rs. 24.16 crore bank facilities of Stesalit Limited (SL). The outlook is 'Positive'. Rationale for rating The revision of outlook takes into account continued improvement in operating income, healthy order book, healthy financial risk profile and strong liquidity position. Group reported growth in revenue from operations by ~30% in FY2024 to Rs 390.93 crore as against Rs. 301.66 crore for FY2023. Group has achieved the operating income of Rs ~260.49 crore in 9M FY 25. EBITDA of the group improved to Rs 47.44 crore in FY 24 from Rs 32.03 crore in FY 23. The order book of the group is Rs. ~402.27 crore as on Dec 2024 and provides revenue visibility over near to medium term. Acuité believes that the Company’s ability to grow its scale of operations and profitability while maintaining a healthy capital structure with improvement in working capital operations remains a key rating indicator. |
| About the Company |
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Himachal-based, Stesalit Limited (SL) was incorporated in 1981 is engaged in the manufacturing of products for Electric and Diesel Locomotives, Coaches, EMUs and Metro such as Transformers, Smoothing Reactors, Traction Motors, Coils, Alternator Mounted Rectifier, HVAC, Control Panels etc. Though the company is operational since 1981 it was taken over by new management in November, 2018 as it was under a resolution plan in National Company Law Tribunal (NCLT). Currently company is managed by REPL’s Management. Company is being managed by professional directors such as Mr. Pawan Ahuja, Mr. Rajat Kumar Sharma and Rajeev Kumar Singhal.
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| About the Group |
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Uttar Pradesh based River Engineering Private Limited (REPL), was incorporated in 2007, by Mr. A.K. Agarwal and Mrs. Neera Agarwal. The company is engaged in manufacturing of highend precision engineering assemblies, components and magnetic parts like tap changers, gear case, dampers, jumpers, couplers and aircraft components among others. The company has its manufacturing units located in Greater Noida. REPL caters to Indian Railways and Metro, Aerospace and Defence sector.
REPL and SL together referred as River Group. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuite has considered consolidated approach of the business and financiaal risk profile of REPL and SL. Consolidation is on account of common management, business and financial linkages.
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| Key Rating Drivers |
| Strengths |
| Experienced Management and established market positions
River Group is promoted and managed by Mr. A.K. Agarwal and Mrs. Neera Agarwal, who have around three decades of experience in the engineering industry and they been associated with the company since its inception. This has helped the group to establish a strong market position and maintain long-standing relations with its customers and customers. Acuité believes that the company will continue to derive benefit from its experienced management and established market position over the medium term. Improvement in Revenue and Profitability River Group’s operation witnessed improvement which is apparent from growth in revenue from operations by ~30% in FY2024 to Rs. 390.93 Cr. as against Rs. 301.66 crore for FY2023. The operating profit margin of the group stood at 12.14% in FY2024 as against 10.62% in FY2023 due to increase in demand in railway sector and group has has strategic alliance for Technology with various companies like AluTec GmbH from Germany, KAA Assemblies Ltd. from Israel, Barco NV from Belgium and many more. Net Profit margin of the group stood at 7.05 percent in FY2024 as against 5.06 percent in FY23. Group has achieved the operating income of Rs ~260.49 crore in 9M FY 25. The order book of the group is Rs. ~402.27 crore as on Dec 2024 and provides revenue visibility over near to medium term. Acuite believes that group is expected to continue to report increase in scale of operations in near to medium term with stable operating and PAT margin. Healthy Financial Risk Profile Group has healthy financial risk profile marked by healthy net worth, gearing and debt protection metrics. Tangible adjusted net worth in FY 2024 stood at Rs. 117.53 Cr. as against Rs. 91.11 Cr. in FY 2023. The increase in the networth is due to accumulation of profits into reserves. Total debt of the group stood at Rs. 111.53 Cr. in FY 2024 against Rs. 97.52 Cr. in FY 2023. Gearing has remained healthy at 0.95 times in FY24 as against 1.07 times in FY23. Interest coverage ratio remained comfortable at 4.42 times in FY24 against 3.32 times in FY23. Likewise, DSCR also remained comfortable at 2.70 times in FY24 against 2.05 times in FY23. DEBT EBITDA position of the company has seen improved from 2.75 times in FY23 to 2.25 times in FY24. Acuité believes that the financial risk profile of the company will remain healthy in near to medium term. |
| Weaknesses |
| Operations in highly competitive industry
The group is engaged in engineering business and the particular sector is marked by the presence of several mid to big size players. The firm faces intense competition from the other players in the sectors. Risk becomes more pronounced as tendering is based on a minimum amount of bidding of contracts and hence the firm has to make a bid for such tenders on competitive prices; which may affect the profitability of the firm. However, this risk is mitigated to an extent as the promoters are operating in this industry for years. Intensive Working Capital Operations Group has high working capital requirements as evident from gross current assets (GCA) of 233 days in FY2024 as compared to 243 days in FY2023. Intensiveness of Working capital is on account of High Inventory and Receivable Days. Debtor days stood at 149 days in FY2024 as against 150 days in FY2023. Inventory days stood same as in last year at 80 days in FY 24. Debtor days are appearing high on year end as group reports higher operating income in last quarter of financial year. Higher revenue in last quarter resulted in higher debtor and debtor days which gets normalise from intensive to moderate in next quarter i.e. First quarter of next FY. Whereas, creditor days stood at from 116 days in FY 2024 against 101 days in FY 2023. Acuite believes that the operations of the group will continue to remain working capital intensive over the medium term due to nature of operations. |
| Rating Sensitivities |
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| Liquidity Position |
| Strong |
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Group has strong liquidity marked by net cash accruals to its maturing debt obligations, current ratio, cash and bank balance. Group generated cash accruals of Rs. 33.91 crore for FY2024 as against debt repayment obligations of Rs. 5.52 crore for the same period. Current Ratio stood at 1.35 times as on 31 March 2024 as against 1.42 times as on 31st March 2023. Working capital limits are utilized at ~ 76.74 per cent during the last twelve months ended Oct 24 accordingly group has cushion available in working capital limits to meet the contingencies. Cash and Bank Balances of group stood at Rs 1.01 crore. Acuité believes that the liquidity position of the group will remain adequate on account of healthy net cash accruals against matured debt obligations over the medium term.
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| Outlook: Positive |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 390.93 | 301.66 |
| PAT | Rs. Cr. | 27.57 | 15.26 |
| PAT Margin | (%) | 7.05 | 5.06 |
| Total Debt/Tangible Net Worth | Times | 0.95 | 1.07 |
| PBDIT/Interest | Times | 4.42 | 3.32 |
| Status of non-cooperation with previous CRA (if applicable) |
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Not Applicable
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| Any Other Information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
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