ICRA reaffirms short term rating of Surya Roshni Limited

ICRA Limited vide its letters dated 25th July, 2025 has reaffirmed Short term rating of [ICRA] A1+ to the Bank facilities (Non-Fund based-BG / LC) of Surya Roshni Limited of Rs. 100 crores.

The rating reaffirmation favourably factors in Surya Roshni Limited's (SRL) strong operational profile, supported by its established market position in the domestic electric resistance welded (ERW) pipes industry, its geographically diversified manufacturing base, a pan-India distribution network, its long track record of over four decades and its established brands, Surya and Prakash Surya. Further, the rating action considers SRL's healthy financial risk profile, the sustained healthy operating performance over the years and its comfortable liquidity position.

In FY2025, SRL's performance remained healthy with a turnover of Rs. 7,435 crore operating margin (OPM) of 7.8%. While the volume in the steel pipe division remained steady, the decline in steel prices moderated the overall revenue. The revenue from the lighting business grew at ~8% to ~Rs 1690 crore with an OPM of ~9%. In the current fiscal, the performance is expected to improve supported by steady volumetric growth in the steel pipes division on the back of optimal utilisation of its existing capacities and a ramp-up of the upcoming capacities in FY2026, in addition to a healthy performance of the lighting division. ICRA expects the company's financial risk profile to remain strong over the medium term, backed by healthy internal accruals. Along with steady profit margins, this is expected to help the company maintain healthy coverage metrics despite the working capital-intensive nature of operations. ICRA notes that the steps being taken by SRL to streamline its working capital cycle have favourably contributed to its cash flow generation and have enabled the company to prepay its debt obligations, leading to nil term loan as on March 31, 2025, coupled with minimal working capital debt.

The rating is, however, constrained by the intense competition in the steel, lighting, as well as consumer appliances segments due to the presence of both organised and unorganised players. This moderates SRL's pricing power, making it more vulnerable to the volatility in raw material prices. Moreover, the cyclicality inherent in the steel business is likely to keep its margins and cash flows vulnerable to the fluctuations in raw material prices and demand for the final products.

Source : Equity Bulls

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SuryaRoshni RatingUpdate ICRA ShortTerm BankFacilities