­Experienced management with an established track record of operations and reputed clientele
THEPL, incorporated in 1975, designs and fabricates engineering equipment, including high pressure titanium and stainless-steel storage tanks, vessels, and heat exchangers. The long track record of company’s operations and established relationship with its reputed customer profile has helped the company in procuring repeat orders from various entities such as SRF Limited, Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Limited, the Department of Atomic Energy, the Government of India, Thyssenkrupp Industrial Solutions India Private Limited, and Naval Physical amongst others. Acuité believes that THEPL’s business risk profile is expected to improve further over the medium term supported by industry experience and domain knowledge of the management, long-standing relationship with its clientele, geographical reach and established track record of operations.

Healthy financial risk profile
Financial risk profile of THEPL is healthy marked by healthy net worth, low gearing and comfortable debt protection metrics. The tangible net-worth of the company stood at Rs.107.74Cr as on March 31, 2025 compared to Rs.103.56 Cr as on March 31, 2024. The improvement in net worth is due to accretion of profits to reserves. The total debt position of the company was nil as on March 31, 2025, resulting in gearing level of 0 times and healthy total outside liabilities to tangible networth (TOL/TNW) 0.09 times as on March 31, 2025. The debt protection metrics remained healthy with  interest coverage ratio and debt service coverage ratio (DSCR) of 15.10 times and 12.33 times respectively in FY2025 against 7.96 times of ICR and 6.52 times of DSCR in FY2024. Acuite believes, the financial risk profile of the company is expected to remain healthy over the medium term due to it healthy networth and no major debt infusion for capex.

­Moderation in operating performance:
The company has registered revenue of Rs.74.16 Cr in FY2025, down by nearly ~40 percent compared to Rs.124.66 Cr registered during FY2024. The decline in revenue was mainly due to lower order flow on account of delays related to electoral phase. Additionally, the company registered Rs.19.76 Cr during the H1FY2026 compared to Rs.27.32 Cr registered during H1FY2025. The operating income is expected to improve to Rs.80-85 Cr by the end of year backed by addition of new orders during the end of H1FY2026. Consequently, operating profit (in absolute terms) also declined to Rs.5.22 Cr in FY2025 from Rs.9.60 Cr in FY2024. However, the margin remained stable at 7.04 percent in FY2025 compared to 7.70 percent in FY2024. Similarly, PAT declined to Rs.4.17 Cr in FY2025 from Rs.6.67 Cr in FY2024 (however, remained stable at margin level with 5.62 percentin FY2025 and 5.35 percent in FY2024). Acuite believes, the operating performance will improve in the near term due to addition of new orders.

Intensive nature of working capital operations:
The working capital operations of THEPL are intensive as evident from the Gross Current Assets (GCA) of 286 days in FY2025 compared to 222 days in FY2024. The elongation in GCA days in primarily due to stretched inventory and debtor days. The inventory days remained at 117 in FY2025 & FY2024. The receivables days stood at 101 in FY2025 compared to 108 days in FY2024. The operations of the company are project based and the gestation period is around 3-12 months due to which the work in progress inventory of the company is usually high. The company receives around 10 percent of the advance payments from the customers and the remaining is received upon completing the dispatch of the orders, however considering the longer gestation period, the balance receivables also get affected and therefore the debtors cycle remains elongated. Further, the creditors cycle of the company at 33 days during FY2025 against 25 days in FY2024. The fund based working capital limits remained unutilized over the last 12 months while non fund based limits were moderately utilized at an average of 40 percent over the past 12 months ending November 2025. Acuite believes, the working capital operations will remain intensive over the medium term, given the inherent nature of business.