| Experienced promoters with established track record:
Established in 2014, Vriddhi Infratech India Private Limited (VIIPL) is promoted and managed by Mr. Suresh Kumar Kavuru, Mr. Venkata Satish Kilaru, and Mr. Suresh Babu Kilaru, who possess around 15 years of experience in the civil construction industry. Over the years, the promoters have developed expertise in executing a diverse range of infrastructure projects, including building construction, road works and irrigation projects. The experience in EPC industries and execution capabilities have enabled the company to undertake projects across multiple geographies and maintain a healthy order book position. Acuité believes that the promoters extensive experience, established relationships with customers and counterparties will continue to support order inflows and the business risk profile over the medium term.
Healthy order book provides strong revenue visibility:
VIIPL's unexecuted order book improved substantially to Rs. 2,014.46 Cr. as on March 31, 2026, from Rs. 701.34 Cr. during the previous rating exercise completed in April 2026. The sizeable order backlog, equivalent to nearly 12 times its FY2026 operating income of Rs. 164.43 Cr, provides strong revenue visibility and supports business growth prospects over the medium term. The order book comprises a diversified mix of projects secured both independently and through joint ventures, including civil construction works as well as recently secured solar EPC and O&M contracts. Further, the projects awarded through joint ventures are executed by the company under back-to-back arrangements, thereby providing adequate visibility over execution and revenue accrual from such contracts. The significant order accretion, particularly in the solar EPC and O&M segment, is expected to support revenue growth and diversification of the company's business profile. However, given that solar EPC and O&M activities represent a relatively new business vertical for the company, its ability to successfully scale up operations and execute these projects within stipulated timelines while maintaining profitability shall remain a key rating monitorable.
Moderate financial risk profile:
VIIPL’s financial risk profile is marked by moderate net worth, comfortable leverage and debt protection metrics. The net worth improved to Rs.60.66 Cr. as on March 31, 2026 from Rs.53.36 Cr. as on March 31, 2025 due to accretion of profits to reserves. The total debt level increased to Rs.55.79 Cr. as on March 31, 2026 (comprising Rs.6.33 Cr. long-term debt, Rs.13.56 Cr. unsecured loans, Rs.27.12 Cr. short-term debt and current maturities of long-term debts of Rs.8.79 Cr.) from Rs.23.51 Cr. as on March 31, 2025, resulting in marginal deterioration of gearing level and total outside liabilities to tangible net worth to 0.92 times and 1.88 times, respectively, in FY2026 from 0.44 times and 1.54 times respectively, in FY2025. The debt protection metrics improved during FY2026 with interest coverage ratio (ICR) of 3.15 times and debt service coverage ratio (DSCR) of 1.78 times from ICR of 2.80 times and DSCR of 0.97 times in FY2025. Debt to EBITDA moderated to 2.52 times in FY2026 from 1.32 times in FY2025, due to increase in debt levels. Acuite believes, VIIPL’s financial risk profile will improve over the medium-term with expected improvement in profitability.
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| Sharp decline in operating income; with recovery anticipated in FY2027:
VIIPL's operating income improved to Rs.164.43 Cr. in FY2026 from Rs.103.15 Cr. in FY2025, albeit remaining significantly lower than Rs.351.11 Cr. in FY2024. The sharp decline in FY2025 was primarily on account of delays and disruptions in the company's flagship projects arising from election-related restrictions and other administrative bottlenecks. Nevertheless, the company exhibited signs of recovery during FY2026, reporting incremental revenue growth of around Rs.61 Cr., supported by progress in previously delayed projects and gradual normalization of execution activities. The operating profit margin improved to 11.94 percent in FY2026 and 13.71 percent in FY2025 from 8.54 percent in FY2024, primarily due to the execution of relatively higher-margin projects. However, despite the improvement in margins, the company's absolute operating profit remained below FY2024 levels owing to the reduced scale of operations. The PAT margin remained largely stable at 4.44 percent in FY2026, compared with 4.30 percent in FY2025 and 4.29 percent in FY2024. Acuite believes that VIIPL's operating scale is likely to improve over the medium term, supported by its healthy unexecuted order book and the expected ramp-up in execution of recently secured projects.
Intensive working capital operations:
VIIPL's working capital operations remained intensive, albeit with some improvement, as reflected in the gross current asset (GCA) cycle of 221 days in FY2026 compared to 260 days in FY2025, though remaining significantly higher than 97 days in FY2024. The elevated GCA levels during FY2025 and FY2026 were primarily attributable to the subdued scale of operations, elongated receivables cycle and higher funds blocked in current assets.
The debtor collection period improved to 103 days in FY2026 from 121 days in FY2025, albeit remaining elevated compared to 24 days in FY2024, primarily due to the nature and diversification of projects undertaken, which involve relatively longer billing and collection cycles. Further, the working capital intensity was impacted by advances for procurement of materials, reflected under other current assets, amounting to approximately Rs.15 Cr. in FY2026 and Rs.20 Cr. in FY2025. Inventory levels, comprising mainly raw materials and work-in-progress, increased to 67 days in FY2026 from 42 days in FY2025 and 14 days in FY2024, reflecting inventory build-up for ongoing projects. The creditor period moderated significantly to 49 days in FY2026 from 233 days in FY2025. The company's fund-based working capital limits remained moderately utilized at an average of 82 percent during the six months ended June 2026, while non-fund-based limits were utilized at around 66 percent. Acuite believes that the company's working capital profile is likely to improve over the medium term, supported by the anticipated ramp-up in project execution, higher operating scale and normalization of receivable cycles.
Customer concentration risk:
VIIPLs order book remains exposed to customer concentration risk, with nearly 90 percent of the outstanding order book concentrated among four customers, namely the Andhra Pradesh Panchayat Raj Department, Solar EPC projects from 100 percent owned SPVs, TGMSIDC, and HLL Lifecare Limited. The high dependence on a limited number of customers exposes the company to risks arising from delays in project execution approvals, certification of work completed and receipt of payments, which may adversely impact its cash flows, profitability and working capital requirements. Nevertheless, the risk is partly mitigated by the fact that a majority of these projects are funded by the Central Government and are being executed for established government departments and public sector entities, which generally exhibit relatively low counterparty risk. Further, the company has emerged as the L1 bidder for a sizeable project from the Ministry of Road Transport and Highways (MoRTH), receipt of which is expected to diversify the customer profile and moderate customer concentration risk to some extent over the near to medium term. Acuite believes, the company ability to diversify its customer profile through fresh order accretion while maintaining healthy cash flows will remain a key rating monitorable.
Exposure to execution and payment delays in government-funded projects:
The company remains exposed to execution, certification, and collection risks inherent in government-funded contracts. Delays in achieving project milestones, obtaining work certifications or realizing payments from government authorities may impact cash flows and increase working capital requirements. Acuité believes that the company's ability to effectively manage these risks while maintaining adequate liquidity and timely project execution will remain a key monitorable over the medium term.
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