| Amphenol Interconnect India Private Limited | ||||
| Rating Reaffirmed | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AA-/Stable’ rating on the long-term facility of Amphenol Interconnect India Private Limited (AIIPL).
AIIPL’s operating performance has improved in fiscal 2022 on back of recovery in demand post pandemic led disturbance and higher realizations. It recorded a revenue growth of around 25% during the year while maintaining healthy operating profitability.
The company derives majority of its revenue by supplying interconnect products and sensors to military and aerospace segment. Revenue is expected to grow by around 10-15% over medium term aided by increasing demand on back of rising defense spending across globe and higher demand from new segments like Telecom, Infrastructure for which the company has developed new products.
Financial risk profile remains robust with healthy cash accrual, nil reliance on external debt and maintenance of surplus liquidity.
The rating continues to reflect the healthy business risk profile of AIIPL, driven by its established market position in the electronic interconnects segment, sound operating efficiencies, and the support and benefits the company receives from being a part of the Amphenol Corporation group. The rating also factors in the robust financial risk profile. These strengths are partially offset by the large working capital requirement, and exposure to intense competition and cyclicality in demand. |
Analytical Approach CRISIL Ratings has applied its parent notch-up framework to factor in support provided by AIIPL’s parent, Amphenol Corporation, USA (rated at BBB+/Stable/A2 by S&P Global Ratings). Also, the business and financial risk profiles of AIIPL and its wholly-owned subsidiary Exa Thermometrics India Pvt Ltd have been combined.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
Sound operating efficiencies are well reflected in the healthy operating margin of more than 26% maintained over the four fiscals through 2022, and comfortable return on capital employed (30-40%). Criticality of the components and effective control over operating cost enables the company to maintain sound operating efficiencies. Thus, AIIPL’s proven technical and operational capabilities in critical interconnect products and geographical diversity in revenue, would continue to support the business.
The management follows a conservative financial policy and has not relied on debt in the past. AIIPL had acquired Exa Thermometrics India Pvt Ltd (ETIPL) in the last quarter of fiscal 2020 for Rs 146 crore. The acquisition was fully funded through surplus cash and bank balance and internal accrual.
Financial risk profile should remain robust over the medium term, driven by strong operating cash flows and moderate working capital and capex requirements. Any future capex or acquisition if undertaken will be funded completely through internal accruals and surplus liquidity and no debt will be availed for the same.
Weaknesses:
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Liquidity: Superior Liquidity is supported by company generating sizeable cash accrual against nil debt repayment obligation. The company also does not use any fund based working capital limits and manages its working capital requirement through moderate credit period from suppliers and internal accruals. Surplus funds are invested in form of fixed deposits and bank balances. The company may utilize this additional fund to fund any acquisition if any opportunity arises going ahead.
The company also maintains healthy cash and cash equivalents which cushions the liquidity. Positive cash flow from operations, along with steadily increasing surplus liquidity (fixed deposits and bank balances), indicates superior liquidity. The current ratio is healthy at around 4.08 times for fiscal 2021 and estimated at around 5 times as on March 31, 2022. |
Outlook: Stable AIIPL’s credit risk profile remains supported by its established market position in the interconnect products segment backed by parent’s support and its sound operating efficiencies and surplus liquidity position. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Company AIIPL is a wholly-owned subsidiary of the US-based Amphenol Corporation (rated at BBB+/Stable/A2 by S&P Global Ratings) and was set up in 1970. Headquartered in Pune, the company manufactures electronic interconnect products, and sensors, primarily for the military and aerospace and space/satellite segments, along with other applications in railways, telecom and industrial sectors. Mr Robert David John is the director and CEO of AIIPL. The company has manufacturing units in Pune and Bengaluru. It also has a research and development and service centre in Hyderabad.
Amphenol Corporation designs and manufactures electronic connectors, sensors, and cabling products, used in various end-markets, including automotive, industrial, and mobile and communications. |
Key Financial Indicators (Consolidated)
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure - List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Bank Guarantee | 75 | State Bank of India | CRISIL AA-/Stable |
This Annexure has been updated on 13-Mar-23 in line with the lender-wise facility details as on 20-Feb-23 received from the rated entity.
Criteria Details
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