| Hind Rectifiers Limited | ||||||
| Rating outlook revised to 'Positive'; Ratings reaffirmed | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has revised its outlook on the long-term bank facilities of Hind Rectifiers Limited (HRL) to ‘Positive’ from ‘Stable’, while reaffirming the rating at ‘CRISIL BBB-’; the short-term rating has been reaffirmed at ‘CRISIL A3’.
The outlook revision reflects expectation of sustained improvement in business risk profile with increase in revenue to around Rs 372 crore in fiscal 2022 from Rs 305 crore in 2021 and is expected to increase further on back of new product introduction and healthy order book of Rs 398 crore as of April 2022. While operating margins are expected to remain in range of 6.5-7%, any major impact of raw material price increase will remain monitorable. Working capital cycle is estimated to have reduced to around 160 days as on March 31, 2022, sustenance of same will also be monitored. Financial profile is expected to continue to remain healthy marked by networth and total outside liabilities to adjusted networth of Rs. 93 crore and 1.4 times for fiscal 2022. It is expected to remain stable over the medium term backed by steady accretion to reserves. Debt protection metrics have also improved as reflected in interest coverage and net cash accruals to adjusted debt ratio of around 3.4 and 0.2 times for fiscal 2022. It is further expected to improve with increase in scale of operations and operating margins over the medium term. While liquidity is also adequate marked by moderate bank limit utilization and sufficient cash accruals against repayment obligations and is further expected to improve over the medium term.
The ratings continue to reflect the extensive experience of the promoters of HRL in the power electronic equipment industry, strong order book providing revenue visibility, healthy financial risk profile. These strengths are partially offset by end-user industry concentration in revenue and tender-based operations volatile operating margins and large working capital requirements. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
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Liquidity: Adequate Cash accrual, expected at Rs 16-18.5 crore annually, should comfortably cover yearly debt obligation of Rs 7.5-9 crore, over the medium term. Bank limit was utilised at an average of 59% over the 12 months through February 2022. Cash and bank balance stood at Rs 1.6 crore as on March 31, 2021, while current ratio was 1.4 times. Internal cash accrual, unutilised bank limit, and cash and bank balance are likely to be sufficient to meet incremental working capital requirement and debt repayment over the medium term. |
Outlook: Positive CRISIL Ratings believes HRL’s business profile will improve with increase in scale of operations through introduction of new products and healthy order book while sustaining operating margins |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Incorporated in April 1958, HRL was promoted by the late Mr S K Nevatia and is currently managed by Mr Saurabh Nevatia and Mr Suramya Nevatia. The company manufactures power electronic equipment such as traction transformers for locomotives and electrical multiple units, converters, rectifiers, power semiconductors and railway transportation equipment such as switch board cabinets, regulated battery chargers and inverters. Facilities are in Mumbai, Nashik (both in Maharashtra) and Dehradun (Uttarakhand). The company is listed on the Bombay and National Stock Exchanges. |
Key Financial Indicators
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
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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 | ||||||||||||||||||||||||||||||||||||||||||||
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This Annexure has been updated on 19-May-2022 in line with the lender-wise facility details as on 06-May-2022 received from the rated entity.
Criteria Details
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