| Kapston Services Limited | ||||||
| Ratings reaffirmed at 'Crisil BBB / Stable / Crisil A3+ '; Rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed rationale Crisil Ratings has reaffirmed its ‘Crisil BBB/Stable/Crisil A3+’ ratings on the bank facilities of Kapston Services Ltd (KSL).
The ratings continue to reflect steady improvement in business performance, backed by increased contribution from the integrated facility management (IFM) services and staffing solutions verticals, extensive experience of the management, established track record of operations, and diversified and established clientele. These strengths are partially offset by average financial risk profile, moderate profitability margin and large working capital requirement. |
Analytical approach Crisil Ratings has combined the business and financial risk profiles of the company with its wholly owned subsidiaries - Kapston Manpower Services Pvt Ltd, Kapston Home Services Pvt Ltd and Kapston Security Services Pvt Ltd, while arriving at the ratings. The subsidiaries are expected to scale up over the medium term and the parent will continue to support operations in the subsidiaries.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key rating drivers - Strengths Experienced management The promoter, Kodali Srikanth, has experience of over a decade in the facilities management and security services business. Chereddi Ramachandra Naidu, who is Chairman, takes care of the human resource management, industrial relations, strategy and project management departments. They are supported by the other directors, Naveen Nandigam and Doddapaneni Kranti Kiran.
Established track record of operations KSL is a proven brand in providing IFM and security services to diversified clients. The company started providing contract staffing solutions to general and information technology (IT) companies in fiscal 2020. The staffing segment witnessed significant growth in the first four years, with revenue increasing to Rs 317 crore in fiscal 2025 from Rs 4 crore in fiscal 2021, and achieving total revenue of Rs 689 crore in fiscal 2025. The IFM segment also grew substantially in fiscal 2026 along with staffing solutions, resulting in estimated revenue of more than Rs 800 crore for fiscal 2026, approximate 20% growth compared with fiscal 2025. The company has been able to keep adding customers and bag new orders from existing customers. The growth momentum is expected to continue over the medium term, backed by its established market position in Andhra Pradesh and Telangana, as well as other states in southern India.
Healthy business performance marking improvement The company has scaled up its operations in the past 4-5 fiscals. Though the profitability margin has remained modest due to higher contribution from the staffing segment, it has increased over the past 3-4 quarters as the newly set up infrastructure across the country for business expansions has started generating substantial revenue addition and covering fixed overheads. Crisil Ratings estimates the business to grow 15-20% over the medium term.
Diversified clientele The customer profile is fairly diversified with none of the customers forming more than 10% of the total revenue in fiscals 2025 and 2026. The company has increased its footprint across all the states and added new clients, supporting strong growth. |
Key rating drivers - Weaknesses Modest profitability profile The operating margin remained modest at 4.6% in fiscal 2025. With operations scaling up and better absorption of fixed overheads, the margin improved in fiscal 2026 and is estimated to be 4.6-5.1%. It was subdued in comparison to the past on account of substantial revenue contribution from the low-margin staffing segment. However, KSL manages to command better margins in the segment in comparison to some of its peers.
Average financial risk profile The financial risk profile has been constrained by high reliance on working capital limits due to the nature of the business. The capital structure is expected to remain moderate with gearing of 1.5-1.6 times estimated as on March 31, 2026 (1.59 times in the previous fiscal). Networth is estimated to be healthy at more than Rs 100 crore as on March 31, 2026. With better profitability, the debt protection metrics have also improved and remained above average with interest coverage ratio expected to be above 3 times over the medium term.
Large working capital requirement The operations will remain working capital intensive, especially in projects where the company must allow credit to its customers. Consequently, receivables will remain high resulting in high reliance on working capital borrowings. The significant scale up has resulted in larger working capital requirement, but it has improved in the past 2-3 years with gradual reduction in the collection cycle. |
Liquidity Adequate Bank limit utilisation was moderate at 88% on average for the 17 months through February 2026. Annual cash accrual is expected to be more than Rs 25 crore against yearly term debt obligation of Rs 4 crore over the medium term, and the surplus will cushion liquidity. The current ratio was healthy at 1.36 times as on March 31, 2025. |
Outlook Stable Crisil Ratings believes KSL’s established presence and growth trajectory will likely support the business performance over the medium term. |
Rating sensitivity factors Upward factors
Downward factors
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About the group Incorporated in 2009, KSL (formerly, Kapston Facilities Management Ltd) is certified under International Organisation for Standardisation (ISO) 9001 and Occupational Health and Safety Assessment Series (OHSAS) 18001:2007 for providing IFM services for security, housekeeping, M&E (electro-mechanical) and allied services. The company ventured into staffing solutions in fiscal 2021. It is listed on the National Stock Exchange. Kodali Srikanth is the promoter of the company.
Incorporated in 2024, Kapston Manpower Services Pvt Ltd, a wholly owned subsidiary of KSL, is dedicated entirely to providing comprehensive manpower solutions.
Incorporated in 2024, Kapston Security Services Pvt Ltd is a wholly owned subsidiary of KSL and specialises exclusively in security services.
For the nine months ended December 2025, the group reported consolidated revenue and profit after tax (PAT) of Rs 614 crore and Rs 20.61 crore against Rs 504.16 crore and Rs 11.78 crore in the corresponding period of the previous fiscal. |
Key financial indicators (consolidated)
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Status of non-cooperation with previous CRA KSL has not cooperated with Acute Ratings and Research Ltd, which has classified the company as non-cooperative through a rationale dated April 22, 2021, on account of non-furnishing of information for monitoring ratings. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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