Volatility in the revenue along with stagnant operating profitability
The firm’s revenue remained volatile over the past three financial years ending FY2025(Prov.). It declined to Rs.188.53 Cr. in FY2025 (Prov.) against Rs.256.55 Cr. in FY2024 and Rs.249.25 Cr. in FY2023. In FY2025 (Prov.), trading of diamonds contributed to about 38% to the revenue and the rest came through manufacturing. The operating profit margin stagnated over the past 3 years at 3.05% in FY2025 (Prov.) against 3.04% in FY2024 and FY2023. However, the PAT margin declined to 0.02% in FY2025(Prov.) against 0.45% in FY2024 and 0.78% in FY2023. The deterioration in operating performance is primarily due to subdued global demand. Around 50% of the revenue comes from exports. To mitigate this, the firm is strategically shifting focus from diamond trading to increasing revenue through the manufacturing of gold-studded jewellery.
Acuite believes that the ability of the firm to improve its operating performance over the medium term will remain a key monitorable.
Working capital intensive operations
The firm’s working capital operations are intensive in nature marked by GCA days of 269 days in FY2025 (Prov.) against 197 days in FY2024. The debtor days stood at 125 days in FY2025 (Prov.) against 83 days in FY2024. The inventory days stood at 143 days in FY2025 (Prov.) against 110 days in FY2024. The creditors days stood at 106 days in FY2025 (Prov.) against 85 days in FY2024. The bank limit utilization for fund based limits stood high at ~97.22% for the last 06 months ended May 25.
Acuité believes the firm's ability to restrict further elongation in working capital cycle will be a key rating sensitivity.
Average financial risk profile
Tanvirkumar & Co. has an average financial risk profile marked by moderate net worth, gearing and average debt protection metrics. The net worth stood at Rs. 41.75 Cr. as on March 31, 2025 (Prov.), against Rs.37.46 Cr. as on March 31, 2024. The gearing ratio stood moderate at 1.41 times as on March 31, 2025 (Prov.), against 1.43 times as on March 31, 2024. The TOL/TNW stood at 2.55 times as on March 31, 2025 (Prov.), against 2.88 times as on March 31, 2024. The firm’s coverage ratios remained average on account of subdued operating profitability with Interest Coverage Ratio of 1.16 times in FY2025 (Prov.) against 1.49 times in FY2024 and DSCR of 0.94 times in FY2025 (Prov.) against 0.84 times in FY2024. Debt/EBITDA level further elevated to 9.67 times in FY2025 (Prov.) against 6.55 times in FY2024.
Acuite’ believes that financial risk profile of the firm is expected to remain at similar levels over the medium term.
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