­Established operations in infrastructure industry with experienced management
TIPPL, incorporated in 2004, has track record of operations of around two decades in the infrastructure industry. The promoters of TIPPL, Mr. Saurav Agarwal and Mr. Gaurav Agarwal have extensive experience in the civil construction business which has enabled the company to obtain orders from reputed clientele reflected by outstanding order book position of Rs.676.29 Cr. as of September 2024. Furthermore, the operating revenues of the company increased to Rs.283.08 Cr. in FY2024 against Rs.262.38 Cr. FY2023 registering a Y-oY growth of ~8 percent during the period. Furthermore, the profitability of the company also remained healthy with operating profit margin of 11.08 percent and absolute profit after tax of Rs.12.78 Cr. in FY2024.

Acuite believes that the promoters' experience and healthy relations with its customers will continue to benefit TIPPL over the medium term.

Healthy financial risk profile
The financial risk profile of the company remained healthy marked by healthy networth, low gearing and comfortable debt protection matrices. The tangible net worth of the company stood at Rs.146.91 Cr. as on 31 March 2024 as against Rs.134.13 Cr. as on 31 March 2023. The improvement is led by increase in tangible net worth on account of accretion of profit to reserves. The debt-equity ratio continues to remain below unity and improved at 0.23 times as of March 31, 2024 as against 0.52 times as of March 31,2023 FY2023. The total debt stood at Rs.33.77 Cr. as of March 31,2024 against Rs.70.17 Cr. as of March 31, 2023. The interest coverage ratio improved to 3.97 times for FY2024 against 3.53 times for FY2023, led by increase in operating profit. The net cash accruals to total debt improved in FY2024 to 0.59 times against 0.25 times in FY2023. The total outstanding liability to tangible net worth improved to 0.30 times during FY2024 as against 0.61 times in FY2023. The debt-EBITDA improved to 1.02 times in FY2024 against 2.35 times in FY2023.

Acuite believes that going forward the financial risk profile of the company is likely to remain healthy backed by steady accruals and no major debt funded capex plans.

Moderate order book position
The outstanding order book of the company stands at Rs.676.29 Cr. as of September 2024. The order book comprises of 18 ongoing orders and four new L1 projects received by the company on which the work will start soon. The orders in hand are to be completed in next 2-3 years, thereby providing revenue visibility in the short medium term. The orders also have escalation clause for orders with tenor above one-year w.r.t labour and material. The increase in labour cost is compensated as per CPI and materials as per WPI. The work order comprises of widening and upgradation of National Highways, improvement and road maintenance works in Bihar and West-Bengal. The company executes entire order on its own and subcontracts semi-skilled and unskilled portion of work. On clientele front, major portion of orders are executed for National Highway Authority of India followed by Road Construction Department of Bihar. As the major orders are being executed for NHAI, the bills are received within 2-3 days of raising the same. On geographical front, the major portion of orders, top two order are being executed in Ladakh, followed by Bihar.

­­Moderate Nature of Working Capital Operations
The company has a moderate working capital management along with low bank limit utilization. The Gross Current Asset (GCA) days stood at 128 days in FY2024 as against 167 days in FY2023. The GCA days improved on account of low inventory levels during the year. The inventory levels stood at 89 days in FY2024 when compared against 155 days in FY2023. The creditor days stood at 9 days in FY2024 as against 19 days in FY2023. The average utilization of the bank limits of the company stood moderate as the fund-based facilities stood at ~33.88% and non-fund-based facilities stood at ~59.73% in the last 6 months ended September 2024.
Going ahead, the working capital operations are expected to remain moderate in near term.

Tender based nature of operations and competitive industry
TIPPL executes government road construction/widening projects. The revenue of the company is highly dependent on the number and value of tenders floated by the Government. Since the nature of operations is tender based, the business depends on the ability to bid for contracts successfully. Acuite believes that the ability of the firm to maintain the scale of operations along with profitability would be the key rating sensitivity factor over the medium term.