Rating Rationale

Brickwork Ratings (BWR) assigns the long-term rating of "BWR BBB" with Stable Outlook and a short-term rating of BWR A3 for the bank loan facilities of Rs. 59.04 crores of Sonu Infratech Limited (SIL).

The ratings assigned derive strength from its experienced promoters and well-established operational track record in the construction industry, healthy financial risk profile as reflected by growing scale of operations with improvement in profitability, and healthy order book position providing good revenue visibility for short to medium term. However, the above ratings remained constrained on account of geographically concentrated revenue and order book, tender-based nature of operations, presence in an intensely competitive and fragmented construction industry with volatility in profit margins associated with fluctuation in raw material prices. 

Outlook: Stable

The stable outlook reflects Brickwork Ratings' (BWR) opinion that SIL will continue to benefit from the extensive experience of its promoter and well-established relationships with key industry clients such as Reliance Industries Limited and Nayara Energy Limited. Further, the financial risk profile of SIL is expected to be maintained over the medium term, supported by steady execution of its order book.

The terms of sanction of the rated facilities include standard covenants normally stipulated for such facilities.

• Experienced Promoters with a long track record of operations :

  SIL was established as a partnership firm in the year 2001 and later was reconstituted as a public limited company in September 2017 and got listed on NSE Emerge Platform on May 2022. Thus, the entity has long standing track record of over two decades in civil construction business. Mr. Ramji Shreenarayan Pandey, the main promoter of the company has an experience of more than two decades in the industry and is actively involved in the business. The promoters’ experience along with their strong understanding of the industry and healthy relationship with customers and suppliers is expected to continue to support the business. The company executes small to medium-sized projects for various government departments and has established relationships with its customers and suppliers.

• Healthy financial risk profile :

  The company maintains a healthy financial risk profile, characterized by a steadily optimizing capital structure and robust operational growth. In FY25-26, consolidated revenue grew 13.85% YoY to Rs.193.88 crore, while Profit After Tax (PAT) expanded to Rs.13.03 crore, strengthening tangible net worth to Rs.80.83 crore (up from Rs.59.52 crore in FY25). Also, the total debt reduced to Rs.45.61 crore as of March 31, 2026 (down from Rs.66.11 crore as of March 31, 2025), leading to significant improvements in overall gearing to 0.56x and TOL/TNW to 1.06x. The debt coverage indicators remain healthy, with an Interest Coverage Ratio (ISCR) of 4.55x and a Debt Service Coverage Ratio (DSCR) of 1.48x for FY2026, providing strong flexibility to the company.

• Healthy order book providing revenue visibility :

  SIL’s scale of operations continues to be supported by a healthy unexecuted order book of Rs.336crore as on August, 2026, leading to an order book-to-TOI ratio of 1.73x of its FY26 revenue (referring to the period of April 01 to March 31), providing healthy near- to medium-term revenue visibility. The company has augmented its order book with projects from Reliance Industries Limited (RIL), M.P. (PWD), Nayara Energy, Kalptaru International Ltd, and others. The repeated orders received from RIL, a reputed client, and other government entities validate its project execution capabilities. Further, the company has received a Letter of Intent (LOI) from Kalptaru International Ltd. for excavation work for the U.P. railway Project and has also submitted tender bids of Rs.130 crore as of date, which will open in the next 1-2 months; this will further strengthen the existing order book. However, timely execution of the existing order book and achievement of the projected revenue growth and profitability remain key monitorables.

• Volatility associated with fluctuations in input prices :

  The major input materials for the entity are structural steel, plywood, bitumen, cement, TMT bar, bricks, sand, etc., the prices of which are volatile. Because raw materials, labor, and subcontracting make up a substantial portion of costs, the company's operating margins remain vulnerable to input price fluctuations. Thus, any sharp increases in these expenses can severely compress profitability, particularly for contracts that lack strong cost-escalation provisions. However, some of the contracts executed by the company contain a price escalation clause, which helps the company maintain its profitability during the year.

• Exposure to intense competition and the tender-based nature of business :

  SIL operates in a highly competitive and fragmented civil construction sector, where projects are primarily secured through aggressive, competitive bidding. This tender-driven model restricts pricing flexibility and places heavy downward pressure on operating margins, which depend entirely on the rates quoted during bidding. Furthermore, profitability is constrained by unpredictable order inflows, budgetary allocations, and project execution risks like labor availability, weather, and geological conditions. Despite these pressures, recurring orders from key clients like Reliance Industries Limited (RIL) highlight the company's strong execution track record and solid client relationships.

• Working capital intensive nature of operations :

  The operations of SIL are inherently working capital intensive, driven by substantial capital lock-in across project-related receivables, unbilled revenues, and inventory requirements. For FY26, the company reported extended collection periods of 157 days (PY 182days) alongside an average inventory holding duration of 115 days (PY 102 days), resulting in an elongated cash conversion cycle of 96 days on a consolidated basis (and 100–125 days on a standalone basis). To fund these ongoing requirements, the company relies heavily on supplier credit (creditor days of 176), short-term bank borrowings, and equity expansion via warrant conversions, maintaining a high average fund-based working capital limit utilization of approximately 98%.

• Geographically concentration risk :

  SIL’s revenue and overall order book are almost completely concentrated in and around Gujarat and Madhya Pradesh. For FY2025–26, Gujarat contributed 70.79% and Madhya Pradesh 27.32% of standalone sales, driven by industrial maintenance for Reliance Industries and Nayara Energy alongside M.P. PWD public civil projects. While these major contracts provide medium-term revenue visibility, this reliance on key regional hubs exposes performance to localized economic slowdowns, state budget shifts, and local regulatory changes.

Positive Rating Factors

• Significant improvement in the scale of operations beyond Rs.350crores with sustained growth in profitability margins, keeping overall gearing below 0.50x, would support a positive rating action.

Negative Rating Factors 

• Decline in TOI below Rs.150crore along with PBILDT margin below 10% alongside weakening of the capital structure, with overall gearing above 1x and TOL/TNW exceeding 2x, would lead to negative rating action.

The company’s liquidity remains adequate as the company maintains a current ratio of 1.93x as of 31 March 2026, backed by substantial current assets—primarily trade receivables and inventories—to cover its short-term obligations like trade payables and working capital debt. However, a significant portion of its working capital remains tied up in project-related receivables and unbilled revenue, resulting in extended cash conversion cycles of 100-125 days. The liquidity is also supported by expected net cash accruals in the range of Rs.20-28crore against its scheduled debt repayment obligations in the range of Rs.9-12 crs for FY27 and FY28. The average fund-based working capital utilization stood high at ~98% for the past 6 months analysed, up to 15 Sep 2026. The company has free cash and cash equivalents of Rs. 0.27 crore as on March 31, 2026. During FY26, capital infusions via warrant conversions have strengthened the equity base of the company.

BWR believes that ESG profile of SIL supports its credit risk profile.

The real estate sector has a significant impact on the environment owing to high emissions, waste generation, and impact on land and biodiversity. The sector also has a significant impact on social factors given its labour-intensive operations and safety issues in construction-related activities.

Environmental: The company prioritizes sustainable execution through robust resource optimization, technology absorption, and energy-conserving equipment across project sites.

Social: The company enforces a stringent Health, Safety, and Environment (HSE) policy to safeguard personnel, adheres to strict workplace safety and maternity standards, and directs at least 2% of average net profits to Corporate Social Responsibility (CSR) programs aimed at education, community welfare, and environmental protection.

Governance: The governance structure is anchored by an experienced Board of Directors and key committees—including Audit, Nomination & Remuneration, and Stakeholder Relationship committees—supplemented by an active Whistleblower/Vigil Mechanism and Code of Conduct for Insider Trading to ensure transparent reporting, regulatory compliance, and ethical business conduct.

Sonu Infratech Limited (SIL) is a Jamnagar, Gujarat-based civil construction and infrastructure engineering company incorporated as a public limited entity in September 2017, following the conversion of its predecessor partnership firm, M/s Sonu Enterprises (established in September 2001). In May 2022, the company successfully launched its Small and Medium Enterprises (SME) Initial Public Offering (IPO) on the National Stock Exchange (NSE). The company is engaged in road construction, civil repair & maintenance, tank foundation, cooling towers, industrial/commercial building construction, civil manpower supply, and pre-cast works. It maintains an established regional footprint across Gujarat, Madhya Pradesh, Jharkhand, and Maharashtra. The company is a government-approved and accredited civil construction contractor having registration from the Military Engineer Services (Defense force) for the Class B category of Building and Road projects.

In March 2025, the company acquired its group company, Arpit Techno Infra Private Limited, based in Gujarat, engaged in the business of civil construction and infrastructure development, making it a wholly owned subsidiary

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 BWR's website Complexity Levels.

Not Applicable

Not Available

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