💰 Financial Performance

Revenue Growth by Segment

Total operating income grew 2.7% YoY from INR 92.75 Cr in FY24 to INR 95.26 Cr in FY25. The core civil and infrastructure segment remains the primary driver, while quarrying and trading activities contributed approximately 24% of total revenue in FY24.

Geographic Revenue Split

Revenue is heavily concentrated in two states, with the majority of orders restricted to Madhya Pradesh and Gujarat, creating a high dependency on regional infrastructure spending.

Profitability Margins

Net Profit Margin (PAT) improved from 3.86% in FY24 to 4.24% in FY25, driven by reduced finance costs and higher non-operating income. However, operating margins moderated from 9.03% in FY24 to 8.73% in FY25 due to rising input costs.

EBITDA Margin

EBITDA margin stood at 8.73% in FY25, a decrease of 30 basis points from 9.03% in FY24, reflecting the impact of higher raw material costs and ancillary overhead expenses.

Capital Expenditure

Historical debt repayment was INR 3.01 Cr in FY25 against a gross cash accrual of INR 6.18 Cr. Planned expenditure is focused on the execution of the INR 194.19 Cr order book.

Credit Rating & Borrowing

The company maintains a credit rating of IVR BBB-/Stable for long-term bank facilities and IVR A3 for short-term facilities. Total debt reduced significantly by 35% from INR 13.64 Cr in FY24 to INR 8.86 Cr in FY25.

⚙️ Operational Drivers

Raw Materials

Key raw materials include steel, cement, sand, and other metals. These materials constitute a significant portion of project costs, though specific percentage breakdowns per material are not disclosed.

Import Sources

Sourcing is primarily domestic, focused within the states of operation including Gujarat and Madhya Pradesh to support regional project execution.

Capacity Expansion

The company operates as a Class AA contractor. While fixed 'capacity' in MT is not applicable, the unexecuted order book of INR 194.19 Cr as of March 31, 2024, represents 2.09x its FY24 revenue, providing visibility for the next 1-2 years.

Raw Material Costs

Raw material costs and sub-contracting expenses led to a moderation in operating margins to 8.73% in FY25. Procurement is managed through tender-based contracts, often including price escalation clauses to mitigate volatility.

Manufacturing Efficiency

Efficiency is measured by project execution timelines; the company has a track record of ensuring timely completion of projects for various government departments.

📈 Strategic Growth

Growth Strategy

Growth is targeted through the steady execution of the current INR 194.19 Cr order book and aggressive bidding for new government infrastructure projects in the road and highway segments. The company leverages its Class AA contractor status to qualify for larger tenders.

Products & Services

Civil and infrastructure construction services, specifically road and highway construction, quarrying services, and trading of construction-related materials.

Brand Portfolio

Rachana Infrastructure Limited (formerly Rachana Construction Company).

Market Expansion

The company is focused on deepening its presence in Madhya Pradesh, Gujarat, and Jharkhand, targeting departments like the PWD and Road Development Corporations.

Market Share & Ranking

The company is categorized as a mid-size registered Class AA contractor in the infrastructure segment.

🌍 External Factors

Industry Trends

The civil construction industry is characterized by intense competition and a shift toward larger, integrated infrastructure projects. RIL is positioning itself by maintaining its Class AA status and focusing on timely execution to secure repeat orders.

Competitive Landscape

Intense competition from numerous small to mid-sized players in a tender-driven market, which keeps operating margins under pressure (currently 8.73%).

Competitive Moat

The company's moat is based on its 20+ years of experience, Class AA registration, and proven execution capability with government clients. However, this is challenged by the low-entry barriers in the fragmented construction sector.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending and budgetary allocations for road construction in Madhya Pradesh and Gujarat.

Consumer Behavior

Not applicable as the primary customers are government and corporate entities.

Geopolitical Risks

Minimal direct geopolitical risk due to domestic focus, though global commodity price spikes (steel/oil) indirectly affect input costs.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by state-level PWD regulations, road construction standards, and labor laws applicable to the infrastructure sector.

Taxation Policy Impact

Current tax expense for FY25 was INR 1.50 Cr against a profit before tax of INR 5.53 Cr, representing an effective tax rate of approximately 27%.

⚠️ Risk Analysis

Key Uncertainties

Fluctuations in raw material prices (steel/cement) and potential delays in project execution could impact margins by 2-3%.

Geographic Concentration Risk

High risk with the majority of the order book and revenue restricted to Madhya Pradesh and Gujarat.

Third Party Dependencies

High dependency on government departments for order inflows and timely payment of receivables.

Technology Obsolescence Risk

Low risk as civil construction relies on established engineering practices, though digital project management adoption is ongoing.

Credit & Counterparty Risk

Counterparty risk is mitigated by dealing with reputed government departments and entities like ONGC Petro Addition Ltd and Power Grid Corporation.