| Kay Cee Energy & Infra Limited | ||||||
| Ratings upgraded to 'Crisil BBB-/Stable/Crisil A3' | ||||||
| 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 upgraded its ratings on the bank facilities of Kay Cee Energy & Infra Limited (KCEIL) to ‘Crisil BBB-/Stable/Crisil A3’ from 'Crisil BB+/Stable/Crisil A4+'.
The rating upgrade reflects the improvement in the business risk profile of the company, with increase in revenue to Rs 152.68 crore in fiscal 2025 from Rs 64.51 crore in fiscal 2024. The business risk profile of the company is strong, supported by stable operating margin of 17-18%, which has led to significant improvement in cash accrual. The ratings also factor in the improvement in the liquidity as KCEIL raised funds in April 2025 through qualified institutional placement (QIP) of Rs 25 crore to meet working capital requirement. The funds will cushion liquidity and result in healthy capital structure, as reliance on working capital limits will be moderate over the medium term.
The ratings reflect the company’s established regional presence backed by the experience of the promoters in the heavy electrical equipment and engineering, procurement and construction (EPC) industry and the healthy financial risk profile of the company. These strengths are partially offset by presence in a highly fragmented industry, and large working capital requirement. |
Analytical Approach Crisil Ratings has considered the standalone business and financial risk profiles of KCEIL. Unsecured loan of Rs 3.50 crore as on March 31, 2025, from the promoters has been treated as debt as the loan is likely to be repaid over the medium term. |
Key Rating Drivers & Detailed Description Strengths: Established regional presence backed by extensive experience of the promoters: The three-decade-long experience of the promoters and their technical expertise in EPC contracts and extra high-voltage (EHV) lines segments have enabled them to develop an understanding of the industry and strong relationships with customers and suppliers.
Repeat orders from existing clients along with onboarding of new customers resulted in significant rise in revenue to Rs 152.68 crore in fiscal 2025 from Rs 64 crore in fiscal 2024, driven by timely execution of the order book. In fiscal 2026, the operating income is expected to improve to around Rs 220 crore. An order book of Rs 536.90 crore as on April 30, 2025, to be executed over the next 18-24 months, provides healthy medium-term revenue visibility.
Moderate financial risk profile: The financial risk profile was comfortable, supported by adjusted networth of Rs 61.69 crore as on March 31, 2025. Capital structure was healthy, as indicated by gearing and total outside liabilities to tangible networth (TOLTNW) ratio of 0.89 time and 1.81 times, respectively, as on March 31, 2025, supported by limited reliance on external debt and healthy accretion to reserve. Debt protection metrics were strong, as reflected in interest coverage and net cash accrual to adjusted debt (NCAAD) ratios of 5.74 times and 0.31 time, respectively, in fiscal 2025.
In April 2025, the company raised funds through QIP of Rs 25 crore to support growth and improve cash flow. This will lead to reduced utilisation of working capital limit, which will remain a key monitorable, and improve the capital structure.
Adjusted networth is expected to improve to over Rs 112 crore as on March 31, 2026, supported by funds raised through QIP and healthy operating profitability. In the absence of any major debt-funded capital expenditure (capex), the capital structure will strengthen in fiscal 2026 with gearing and TOLTNW ratio expected at 0.45 time and 1.10 times, respectively. The interest coverage and NCAAD ratios are expected to remain robust at 8.78 times and 0.52 time, respectively, in fiscal 2026.
Weaknesses: Susceptibility to risks inherent in tender-based business amid intense competition: KCEIL undertakes EPC projects by submitting bids for tenders floated by government or private entities. Hence, revenue and profitability depend on the ability to bid successfully for tenders. Intense competition may continue to constrain scalability, pricing power and profitability. Expenditure of government agencies and public sector undertakings is directly linked to the economy. Any delay or deferment of capex in end-user industries could limit scalability. Though the operating margin sustained at 17.77% in fiscal 2025 (19.9% in fiscal 2024) and is expected around 18% in fiscal 2026, sustenance of the operating margin amid risks related to tender-based operations and intense competition will remain monitorable.
Large working capital requirement: Operations are working capital intensive, as indicated by gross current assets (GCAs) of 364 days as on March 31, 2025, driven by receivables of 96 days, inventory of 99 days and large earnest money deposits. As the company is in the initial stages of executing some orders, the working capital requirement may improve once execution is stabilised and realisations are timely. The GCAs are expected around 352 days as on March 31, 2026, driven by expected receivables and inventory of 120 days. The working capital cycle is partly supported by payables of around 178 days. Efficient working capital management amid increasing revenue will remain monitorable. |
Liquidity: Adequate Liquidity was adequate with fund-based working capital limit utilised around 59% while the non-fund-based limit was utilised 75% over the 12 months through April 2025. Owing to high execution of orders in the second half of fiscal 2025, average utilisation of fund-based limit increased to 96% in the six months through March 2025. Cash accrual, expected to be around Rs 26 crore per annum, will sufficiently cover yearly term debt obligation of Rs 2.0-2.5 crore over the medium term. In addition, surplus will cushion the liquidity.
The company raised Rs 25 crore through QIP in April 2025 to fund its working capital requirement.
Current ratio was healthy at 2.12 times on March 31, 2024. The promoters will likely extend equity and unsecured loans to meet working capital requirement and debt obligation. |
Outlook: Stable Crisil Ratings believes KCEIL will continue to benefit from the extensive experience of the promoters. |
Rating sensitivity factors Upward factors
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About the Company Incorporated in 2015, KCEIL undertakes EPC projects as well as handling, erection, testing and commissioning of equipment and materials for power transmission and distribution systems, including transmission lines, construction of substations, automation, extension/modification and expansion of existing power systems for various government and private entities. |
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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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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