May 19, 2025

Shekhawati Entrepreneur Private Limited: [ICRA]B+(Stable) Assigned

Summary of rating action

Current rated amount

Instrument* Rating action
(Rs. crore)
Long Term- Overdraft 5.00 [ICRA]B+(Stable); Assigned

Total 5.00
*Instrument details are provided in Annexure I

Rationale

The rating assigned to Shekhawati Entrepreneur Private Limited (SEPL) is constrained by its limited track record in the
construction industry (started operations in FY2020) and a weak financial risk profile. This is reflected in its modest scale of
operations (Rs. 57.1 crore in FY2024 (audited) and Rs. 100 crore in FY2025, as per management’s guidance), low operating
profit margin (Less than 5%) and marginal net worth (Rs. 5 crore as of December 2024, provisional data), leading to high
leverage (TOL/TNW of 2.6 times as of December 2024). The company has been operating as a subcontractor to larger EPC
players in the road construction segment, which also constrains its margin profile. SEPL’s revenues and operating margins
remain susceptible to the stiff competition and tender-driven nature of business, an inherent feature of the entities associated
with the construction industry. The company’s ability to sustainably build up its order book (OB) and execute in a timely manner
remains crucial from a credit perspective.

The rating is, however, supported by its moderate OB position, which stood at ~Rs. 213 crore as of March 2024. This translates
into OB/OI in FY2025 (provisional) of 2.1 times, providing revenue visibility for a period of 1.5-2 years. The unsecured loans
(USL) extended by the promoters, limited the company’s reliance on bank borrowings until FY2025. However, with the scale-
up in operations and repayment of USLs, external debt levels are expected to increase. SEPL’s ability to enhance its bank lines
to manage the scaling up of its operations while maintaining a prudent working capital cycle and liquidity remains a key credit
monitorable.

The Stable outlook on the long-term rating reflects ICRA’s opinion that the company will sustain its scale of operations given
the outstanding OB. The company’s coverage metrics are likely to remain commensurate with its rating level, despite operating
margins being range-bound (3-4%).

Key rating drivers and their description

Credit strengths

Moderate order book position provides medium-term revenue visibility - SEPL had an unexecuted OB of ~Rs. 213 crore as of
March 2025, translating into OB/OI (order book/operating income) (FY2025 estimated) of over 2 times, providing medium-
term revenue visibility.

Credit challenges

Weak financial risk profile – SEPL has a limited track record of operations, having started its operations in FY2020. Its financial
profile remains weak, as reflected in a modest scale (Rs. 100 crore in FY2025 estimated), low margins (3-4%) and marginal net
worth (Rs. 5 crore as of December 2024). High reliance on creditors, along with low net worth, results in elevated leverage
metrics (TOL/TNW of 2.6 times as on December 31, 2024). The company remains susceptible to any significant decrease in the
credit period extended by its suppliers, which could pressurise the cash flows. Additionally, its liquidity is stretched, with

www.icra.in
Sensitivity Label : Internal Page | 1
 limited cushion in its fund-based limits and no sanction of non-fund-based limits. Given the scale-up in operations, its ability
to improve profitability and judiciously manage its working capital cycle (including tie-up for working-capital lines) remains
important from a credit perspective.

High client and geographical concentration risks - As per the current OB, more than 90% of the company’s revenues will stem
from the Rajasthan-based project, exposing it to region-specific economic and political risks. Also, the entire OB constitutes
sub-contracting orders from a single counterparty, which exposes its revenues to client concentration risk. However, the
promoter family’s long and established association with this client mitigates counterparty risk to an extent.

Competitive industry; tender-driven nature of business impacting pricing flexibility - SEPL is exposed to intense competition,
given the highly fragmented industry with numerous players in the organised and unorganised segments. Also, given the
tender-based contract award system, the company remains exposed to volatility in order inflows, revenues and pressure on
profit margins.

Liquidity position: Stretched

The company has minimal long-term debt obligations, but the cushion remains limited in terms of free cash on books or
unutilised working capital limits, which constrain its liquidity. The cash flows from operations are projected to be Rs. 2-3 crore.
The limit utilisation for the Dropline Overdraft facility for trailing 11 months, as of February 2024, stood at 61%. At present,
the company has no non-fund-based sanction limits. Timely sanction (NFB) and enhancement of WC limits would be imperative
for sustainably scaling up of operations.

Rating sensitivities

Positive factors – Sustained and significant improvement in scale of operation and net worth, along with improvement in
liquidity position, will be crucial for a rating upgrade.

Negative factors – Pressure on SEPL’s rating could arise if there is a significant decline in the scale of operations due to a slow
fresh order addition or delays in execution. Further, any significant deterioration in the working capital cycle and/or any major
debt-funded capex, which adversely impacts the company’s leverage metrics and/or liquidity position, would also be a credit
negative.

Analytical approach

Analytical approach Comments

Corporate Credit Rating Methodology

Applicable rating methodologies
Rating Methodology on Construction

Parent/Group support Not applicable

Consolidation/Standalone For arriving at the ratings, ICRA has considered the standalone financials of SEPL.

About the company

Incorporated in 2009, Shekhawati Entrepreneur Private Limited (SEPL) is an engineering, procurement and construction player
based in Rajasthan. SEPL is primarily involved in road and EPC works, often subcontracting for private players such as New
India Contractors Private Limited. The company executes construction work for roads, bridges, canals and others. Additionally,
SEPL is also involved in optical fibre laying, precast manhole manufacturing and RCC Hume pipes production. The company
recently executed a HAM project in Maharashtra, subcontracted by New India Contractors and Developers Private Limited. Its
primary clientele includes the NHAI, MoRTH and others. SEPL has undertaken projects across Rajasthan and Maharashtra.

www.icra.in
Sensitivity Label : Internal Page | 2
 Key financial indicators (audited)

SEPL (Standalone) FY2023 FY2024 9M FY2025*

Operating income 9.2 57.1 67.8
PAT 0.2 0.5 2.2
OPBDIT/OI 3.7% 2.2% 4.3%
PAT/OI 2.3% 0.8% 3.2%
Total outside liabilities/Tangible net worth (times) 7.3 5.1 2.6
Total debt/OPBDIT (times) 37.4 5.5 0.5
Interest coverage (times) 120.6 13.1 4.4
Source: Company, ICRA Research; * Provisional numbers; All ratios as per ICRA’s calculations; Amount in Rs. crore; PAT: Profit after tax; OPBDIT: Operating
profit before depreciation, interest, taxes and amortisation

Status of non-cooperation with previous CRA: Not applicable

Any other information: None

Rating history for past three years

Chronology of rating history for the past 3 years

Current (FY2026)
FY2025 FY2024 FY2023
Instrument
Amount
May 19,
Type rated Date Rating Date Rating Date Rating
2025
(Rs. crore)

Long [ICRA]B+
Overdraft 5.00 - - - - - -
term (Stable)

Complexity level of the rated instruments

Instrument Complexity indicator

Long-term- Overdraft Simple

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated.
It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's
credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or
complexity related to the structural, transactional or legal aspects. Details on the complexity levels of the instruments are
available on ICRA’s website: Click here

www.icra.in
Sensitivity Label : Internal Page | 3
 Annexure I: Instrument details

Instrument Coupon Amount rated

ISIN Date of issuance Maturity Current rating and outlook
name rate (Rs. crore)
NA Overdraft NA NA NA 5.00 [ICRA]B+(Stable)
Source: Company

Please click here to view details of lender-wise facilities rated by ICRA

Annexure II: List of entities considered for consolidated analysis - Not applicable

www.icra.in
Sensitivity Label : Internal Page | 4
 ANALYST CONTACTS
Ashish Modani Suprio Banerjee
+91 22 6169 3300 +91 22 6114 3443
[email protected] [email protected]

Ritu Goswami Akarsheet Agarwal

+91 124 4545826 +91 124 4545 5310
[email protected] [email protected]

RELATIONSHIP CONTACT
L. Shivakumar
+91 22 6114 3406
[email protected]

MEDIA AND PUBLIC RELATIONS CONTACT

Ms. Naznin Prodhani
Tel: +91 124 4545 860
[email protected]

HELPLINE FOR BUSINESS QUERIES

+91-9354738909 (open Monday to Friday, from 9:30 am to 6 pm)

[email protected]

ABOUT ICRA LIMITED

ICRA Limited was set up in 1991 by leading financial/investment institutions, commercial banks and financial services
companies as an independent and professional investment Information and Credit Rating Agency.

Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a Public Limited Company,
with its shares listed on the Bombay Stock Exchange and the National Stock Exchange. The international Credit Rating Agency
Moody’s Investors Service is ICRA’s largest shareholder.

For more information, visit www.icra.in

www.icra.in
Sensitivity Label : Internal Page | 5
 ICRA Limited

Registered Office
B-710, Statesman House, 148 Barakhamba Road, New Delhi-110001
Tel: +91 11 23357940-45

Branches

© Copyright, 2025 ICRA Limited. All Rights Reserved.

Contents may be used freely with due acknowledgement to ICRA.
ICRA ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments. ICRA ratings are subject to a process of surveillance,
which may lead to revision in ratings. An ICRA rating is a symbolic indicator of ICRA’s current opinion on the relative capability of the issuer concerned to
timely service debts and obligations, with reference to the instrument rated. Please visit our website www.icra.in or contact any ICRA office for the latest
information on ICRA ratings outstanding. All information contained herein has been obtained by ICRA from sources believed by it to be accurate and reliable,
including the rated issuer. ICRA however has not conducted any audit of the rated issuer or of the information provided by it. While reasonable care has been
taken to ensure that the information herein is true, such information is provided ‘as is’ without any warranty of any kind, and ICRA in particular, makes no
representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. Also, ICRA or any of its group
companies may have provided services other than rating to the issuer rated. All information contained herein must be construed solely as statements of
opinion, and ICRA shall not be liable for any losses incurred by users from any use of this publication or its contents.

Sensitivity Label : Internal