Infomerics Raises Credit Rating of Renny Strips Limited to IVR A- / Stable

2026-09-24 12:20:57 Industry

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Credit rating agency Infomerics Valuation and Rating Limited has revised its ratings on Renny Strips Limited (previously Renny Strips Private Limited) upward, covering bank loan facilities totaling Rs. 367 crore — an increase from the earlier Rs. 341.58 crore. The company's long-term facilities now carry an IVR A- rating with a Stable outlook, while short-term facilities have been upgraded to IVR A2+, both under RBI's regulatory oversight.

Among the key positives cited was the launch of a 22 MW captive solar power facility, projected to trim annual electricity expenses by close to Rs. 25 crore and provide additional support to profitability.

At the same time, the agency flagged ongoing risks tied to raw material price fluctuations, heavy competition in the steel industry, and the sector's cyclical tendencies as factors that could weigh on performance.

Outlook

Infomerics has assigned a Stable outlook, anticipating that Renny Strips will maintain its current pace of operations, backed by consistent production and sales, growing value-added revenue contribution, and continued gains from its integrated manufacturing model.

Key Strengths Identified

Revenue and Profitability Momentum
Between FY23 and FY26, the company's operating income expanded at a CAGR of nearly 26%, with FY26 revenue climbing close to 25% over the prior year. EBITDA margin rose to 8.39% in FY26, up from 5.74% in FY25, while PAT margin improved to 3.94%. This trend carried into Q1 FY27, with total operating income reaching Rs. 318.40 crore and EBITDA margin advancing further to 8.83%, supported by exports and a richer product mix.

Promoter Experience and Management Depth
The company was established by Mr. Dev Raj Gupta, who carries over four decades of steel-sector experience, and is now steered by his son, Mr. Binny Gupta, Chairman and Managing Director, with upwards of twenty years in the field. Mrs. Chetna Gupta serves as Whole-Time Director, and the board is rounded out by independent directors bringing one to three decades of cross-functional experience.

Moderate Leverage Position
A roughly Rs. 120 crore capex for the solar plant, mostly debt-financed, nudged up leverage metrics — overall gearing rose from 2.08x to 2.45x, and TOL/TNW from 2.68x to 3.14x — though both stayed within acceptable limits. Continued promoter support through subordinated unsecured loans (Rs. 47 crore outstanding, including a Rs. 11.48 crore addition in FY26) has helped cushion the balance sheet. Interest coverage strengthened to 3.41x from 2.63x, and Total Debt/GCA improved to 6.54x from 8.48x.

Working Capital Management
The operating cycle lengthened slightly to 74 days in FY26 from 59 days, reflecting higher inventory needs tied to expanding demand in the pipe and scaffolding businesses. The company holds roughly 68 days of average inventory, offers customers 7–35 days of credit, and takes about 10 days of credit from suppliers, with collections holding steady at 24 days.

Liquidity Position: Adequate

The company's liquidity stood at a current ratio of 1.12x as of March 31, 2026. Gross cash accruals rose sharply to Rs. 62.06 crore in FY26 from Rs. 30 crore the year before, comfortably covering scheduled repayments through FY27–FY29. Working capital facility utilization averaged 89.42% over the twelve months to June 2026.