| Extensive experience of the promoters coupled with a diversified product profile
The Tenty Group has been in the plastic packaging segment for more than four decades. The group has its own units in West Bengal and Assam, respectively. Over the years, the extensive experience of the promoters has helped the group build a healthy reputation and long-standing relationships with its reputed clientele. The promoters’ experience of over four decades, their strong understanding of local market dynamics, and healthy relations with suppliers and customers should continue to support the business. The group has a diversified product profile that includes a plastic pen and its spare parts, fan and fan parts, various types of packaging products, and varied-size containers, cups, and bottles made of 100 percent food-grade materials. The products find application in various end-user industries, such as the education sector, food and beverage sectors, FMCG, etc. The group's reputed customer base and diversified product profile de-risk the business risk to a large extent. Acuite believes that the experienced management of the promoters and its diversified product profile will continue to support the business risk profile of the group.
Moderation in revenues albeit comfortable profitability
The group's operating performance remained healthy in FY26 (Prov.), supported by improvement in operating profitability despite a marginal moderation in revenue. The revenue stood at Rs.832.48 crore in FY26 (Prov.) as against Rs.845.47 crore in FY25, owing to relatively lower demand during the year. However, the business continues to demonstrate resilience, reflected in the group's diversified customer base comprising reputed clientele. Further, the group has reported revenue of approximately Rs.330 crore during 5MFY27, entirely from external sales with no inter-group transactions, and expects to achieve revenue in the range of Rs.875-900 crore during FY27. The group is engaged in the manufacturing and trading of packaging products, electric goods and appliances, providing revenue diversification across segments.
The operating margin improved to 10.20 per cent in FY26 (Prov.) from 8.28 per cent in FY25, driven by better realizations, easing raw material cost pressures, improved operational efficiencies, and higher supplier discounts availed through enhanced utilization of bill discounting and channel financing facilities that facilitated timely payments to creditors. While the PAT margin moderated to 2.01 per cent in FY26 (Prov.) from 2.68 per cent in FY25, primarily due to higher finance costs associated with increased usage of such financing facilities, the impact remains largely financing-related in nature. Nevertheless, the group's cash accrual generation continues to remain healthy, supported by higher non-cash depreciation expenses, thereby underpinning its overall financial flexibility and debt servicing ability. Acuite believes that the operating performance of the group would improve steadily in near to medium term on the back of stable demand.
Moderate Financial Risk Profile
The group’s financial risk profile remained moderate, supported by an improved net worth base, moderate leverage levels and debt protection metrics. The tangible net worth improved substantially to Rs.180.69 crore as on March 31, 2026 (Prov.) from Rs.79.27 crore as on March 31, 2025, on account of accretion of profits to reserves and increase in share premium marked by allotment of shares pursuant to the scheme of amalgamation in Tenty Limited. Further, Acuite has considered Quasi equity to the tune of Rs.145.77 crores as on March 31, 2026 (Prov.) as part of net worth as these loans are subordinated to bank debt. The group continues to have a sizeable intangible asset base of Rs.288.90 crores as on March 31, 2026 (Prov.) as against Rs.284.07 crores as on March 31, 2025 comprising trademarks and marketing rights. The gearing of the group improved and stood at 1.65 times as on March 31, 2026 (Prov.) as compared to 4.32 times as on March 31, 2025, the improvement is on account of improved net worth base. The total debt stood at Rs.298.09 crores as on March 31, 2026 (Prov.) which consists of Rs.54.58 crores of long-term debt (including Rs.8.44 crores of lease liability), Short term debt of Rs.219.97 crores, USL from promoters & directors of Rs.2.61 crores and CPLTD of Rs.20.92 crores (includes Rs.2.61 crores of lease liability) during the same period.
Debt/EBITDA of the group improved and stood at 2.88 times as on March 31, 2026 (Prov.) as against 4.21 times as on March 31,2025. The Total outside Liabilities/Tangible Net Worth (TOL/TNW) improved and stood at 2.79 times as on March 31, 2026 (Prov.) as against 8.60 times as on March 31, 2025. The debt protection metrics of the group remained moderate marked by Interest Coverage Ratio (ICR) which stood at 1.62 times in FY2026 (Prov.) as against 1.63 times in FY2025 and Debt Service Coverage Ratio (DSCR) deteriorated and stood at 1.19 times in FY2026 as against 1.62 times in FY2025 due to increased debt obligations. Net Cash Accruals/Total Debt (NCA/TD) stood at 0.12 times in FY2026 as against 0.13 times in FY2025. Going forward, the group's capex requirements are expected to remain largely towards routine modernization and incremental capacity enhancement and are proposed to be funded through a balanced mix of internal accruals and term borrowings. Accordingly, Acuité believes that the group's financial risk profile is likely to remain moderate over the near to medium term, supported by healthy net worth, continued promoter support with no major debt funded capex plan.
|
| Intensive Working Capital Operations
The group’s working capital operations continue to remain intensive in nature, reflected in the high Gross Current Asset (GCA) of 235 days in FY26 (Prov.), albeit improved from 265 days in FY25. The high working capital intensity is primarily driven by the elongated receivables cycle. Debtor days, though improved but remained high at 167 days in FY26 (Prov.) as against 196 days in FY25, owing to the seasonal nature of the fan industry, wherein a significant portion of sales is executed during the last quarter of the financial year ahead of peak summer demand and collections are realized in the subsequent months. While receivables of Tenty Limited and Polar Elektric Limited largely remain within the normal credit cycle, the overall debtor profile continues to be impacted by ageing receivables of Excellent Moulders. Nevertheless, the group has undertaken focused collection efforts in Excellent Moulders, resulting in a reduction in receivables outstanding for more than 365 days to Rs.26.35 crore in FY26 (Prov.) from Rs.31.91 crore in FY25, with further recoveries expected during FY27.
Further, inventory holding remained moderate at 61 days in FY26 (Prov.) as against 69 days in FY25. However, creditor days declined sharply to 76 days in FY26 (Prov.) from 159 days in FY25, reflecting faster supplier repayments and consequently increasing reliance on external working capital borrowings. The working capital intensity is also evidenced by the relatively high utilization of bank facilities, with average fund-based limit utilization at 86.28 per cent, LC utilization at 92.18 per cent, and BG utilization at 100 per cent over the six-month period ended June 2026. Acuité believes that the group's working capital operations are likely to remain intensive, given the inherent seasonality of the end-user industry and the still-elevated receivables position, although sustained recovery of long-outstanding debtors and improved collections may provide some moderation in the working capital cycle over the medium term.
Susceptibility of profitability to volatility in the raw material prices
The prices of the raw materials are impacted by global demand and linked to global crude oil prices, making them highly volatile. The major raw materials for Tenty’s products are plastic granules derived from crude oil, making them highly volatile. The fluctuation in prices is generally passed on to the customers, albeit with a lag. The group’s margins are susceptible to the rise in material costs owing to a time lag in the passthrough of price hikes to the customers, although the regular price revision mitigates the risk to an extent.
Intense competition in the packaging industry
The plastic packaging industry is highly fragmented and the consequent intense competition from various players may continue to constrain scalability, pricing power and profitability. The Indian flexible packaging industry is highly fragmented on account of the low capital intensity, low entry barriers and easy availability of raw materials. High competition put pressure on margins thereby reducing bargaining powers with customers for players such as Tenty group. Further, raw material used in packaging is plastic granules the prices of which are fluctuating having direct impact on operating margins. Acuité believes that the ability of the group to pass on such adverse impact to its customers remain a key sensitivity factor.
|
