About SRM Contractors
Incorporated in 2008 and based in Jammu, SRM Contractors develops infrastructure in challenging terrain. It works across Jammu & Kashmir, Ladakh, Uttarakhand, Himachal Pradesh, Arunachal Pradesh, Gujarat and Odisha. The company focuses on EPC and HAM projects, including roads, bridges, tunnels and slope stabilisation, for government and private entities.
Investment Rationale
- Order book supports near-term execution: The Mar’25 order book stood at INR 1,461 Cr., or 2.8x FY25 revenues, with an execution period of 18 to 24 months. Roads and bridges accounted for 58%, tunnels 13% and slope stabilisation 29%.
- Pipeline of prospective orders: Orders under evaluation or in pipeline totalled INR 5,252 Cr. as on Mar’25, including INR 1,636 Cr. of HAM projects, compared with INR 2,743 Cr. as on Mar’24.
- Emphasis on complex projects: The company prioritises slope and tunnel projects, which the report describes as complicated to execute and as offering higher profitability. SRM is registered as a ‘Class A’ contractor with Jammu & Kashmir’s Public Work Department.
- MIPL acquisition: SRM acquired a 51% stake in Maccaferri Infrastructure Pvt. Ltd. from Officine Maccaferri S.p.A. – Italy, aiming to combine expertise in slope stabilisation and other geo-tech solutions. MIPL had turnover of INR 109 Cr. in Mar’24, up 135% Y-o-Y.
- Expansion capex: Planned FY26 capex of INR 40 Cr. is for additional equipment and machinery to support execution of the existing order book.
- Credit rating upgrade: CARE upgraded the company’s rating to CARE A-/Stable/A2 on 03-Jul-25 from CARE BBB+/Stable/A3+.
SRM Contractors Key Financials
| Particulars | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue | 160 | 264 | 300 | 342 | 528 |
| % Y-o-Y | 65% | 14% | 14% | 54% | |
| Gross Margin % | 30.7% | 29.6% | 27.5% | 24.7% | 28.0% |
| EBITDA % | 10.3% | 11.4% | 12.8% | 12.2% | 15.4% |
| PAT % | 5.1% | 6.6% | 6.2% | 7.7% | 10.1% |
| Debt (Short+Long) | 32 | 32 | 47 | 48 | 41 |
| Debt/Equity | 1.2x | 0.7x | 0.7x | 0.5x | 0.1x |
| CFO | 14 | 10 | 13 | 14 | 1 |
NWC includes Inventory, Receivables & Payables. NWC days is computed as % of rev.
Revenue increased to 528 in FY25 from 342 in FY24, while the EBITDA margin rose to 15.4% from 12.2%. CFO was 1 in FY25 and CFO / EBITDA was 1%.
Valuation and Target Price
At a CMP of INR 510.00/- as of 17-Jul’25, the report lists the target price as Unrated and provides no target price or upside. It does not state a valuation basis or give a Buy, Hold, Reduce or Sell recommendation.
Order Book by State
SRM is pursuing diversification into other states, including non-high-altitude areas. Jammu & Kashmir remained the largest share of its FY25 order book.
| State | FY24 | % of FY24 Total | FY25 | % of FY25 Total |
|---|---|---|---|---|
| Arunachal Pradesh | 15.56 | 0.9% | 1.82 | 0.1% |
| Gujarat | 171.23 | 10.3% | 261.11 | 17.9% |
| Himachal Pradesh | 118.53 | 7.1% | 94.61 | 6.5% |
| Jammu & Kashmir | 689.62 | 41.3% | 593.93 | 40.7% |
| Leh & Ladakh | 271.90 | 16.3% | 174.84 | 12.0% |
| Odisha | 53.40 | 3.2% | 53.40 | 3.7% |
| Uttarakhand | 348.07 | 20.9% | 280.88 | 19.2% |
| Total | 1,668.31 | 100.0% | 1,460.59 | 100.0% |
Key Risks
- Project execution: Construction projects carry execution risks. The company clarified that tensions in the Kashmir region had no material impact on its business operations.
- Working capital and margins: The report identifies working-capital-intensive operations in a competitive industry as a potential source of pressure on margins, while noting that the company improved margins Y-o-Y.
- Capex and acquisition: Use of planned FY26 capex of INR 40 Cr. for order book execution and the realisation of synergies from the MIPL acquisition are key monitorables.
Our View
The note points to the order book, focus on slope and tunnel projects, and FY25 margin improvement as key features of SRM Contractors. Execution, working-capital needs, FY26 capex deployment and MIPL synergies remain important monitorables; the report leaves the stock Unrated and states no target price.