| Rishabh Instruments Limited | ||||||
| Ratings reaffirmed at 'CRISIL BBB/Stable/CRISIL A3+' | ||||||
| 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 BBB/Stable/CRISIL A3+’ ratings on the bank loan facilities of Rishabh Instruments Ltd (RIL; part of the Rishabh group).
The consolidated operating income increased to Rs 694 crore in fiscal 2024, from Rs 571 crore in fiscal 2023 and stood at Rs 351 crore in the first half of fiscal 2025, supported by continuous product additions and healthy demand. However, the operating margin declined to 11.2% in fiscal 2024 from 14.30% in fiscal 2023. It fell further to 6.1% in the first half of fiscal 2025, due to the impact on the margin of the aluminium die casting business, which reported operating loss and is expected to be under pressure over the next few quarters. The ratings are supported by the strong financial risk profile and adequate liquidity in the form of large cash and bank balance and unutilized bank lines.
The ratings continue to reflect the Rishabh group's established position in the industrial control products (ICPs) and testing and measuring instruments (TMI) businesses, diversified customer profile, increasing revenue and healthy financial risk profile. These strengths are partially offset by volatility in operating margin and large working capital requirement. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of RIL and its wholly owned subsidiaries and step-down subsidiaries. This is because all these entities, collectively referred to as the Rishabh group, have operational and financial linkages, and are under a common management.
Unsecured loan of Rs 17.79 crore as on March 31, 2024, from the promoter and the group companies has been treated as debt as it is repayable on demand
Please refer to Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Established market position: The Rishabh group is a leading player in the ICP and TMI business. It is one of the world’s largest manufacturers of panel meters. Along with panel meters, the company also manufactures various other ICPs and TMIs including controllers, transducers, multifunction meters and current transformers. The Rishabh group has strong in-house product development experience. The group has technical collaborations with many international instrument manufacturers. Besides, the group benefits from the extensive experience of its promoter in the electronics equipment industry and its qualified management team.
Strong and diversified clientele: The group has a wide distribution network, with 11 offices across the country. It also exports to more than nine countries including the Middle East, Latin America, Germany, Poland, the United Kingdom, the United States, Argentina, African countries and Australia. It has a healthy client base.
Increasing revenue: The operating income increased steadily over the years, from Rs 397 crore in fiscal 2021 to Rs 694 crore in fiscal 2024, backed by increasing product portfolio, geographical diversification of clientele and acquisitions. Strong in-house research and development (R&D), established customer relationships and professional management should help the Rishabh group maintain steady topline growth and a stable market position over the medium term.
Healthy financial risk profile: Owing to steady accretion to reserve and the initial public offering (IPO) in fiscal 2024 of RIL, the networth improved to Rs 533 crore as on March 31, 2024, from Rs 382 crore a year ago. The capital structure was adequate with the gearing and total outside liabilities to adjusted networth (TOLANW) ratio of 0.1 time and 0.4 time, respectively, as on March 31, 2024. Though the debt is expected to increase in fiscal 2025 with the ongoing debt-funded capital expenditure (capex), the capital structure will remain comfortable with the gearing and TOLANW ratio below 1 time each as on March 31, 2025. The debt protection metrics were strong driven by moderate profitability and limited debt, as reflected in interest coverage and net cash accrual to total debt ratios of 17.69 times and 1.15 times, respectively, for fiscal 2024. With impact on the operating profitability in fiscal 2025 and the debt for capex, the debt protection metrics will slightly weaken, yet remain comfortable.
Weaknesses: Large working capital requirement: The operations are working capital intensive, as reflected in the gross current assets of 243 days as on March 31, 2024, driven by receivables of 69 days and inventory of 103 days. To customers, the group provides open credit of 60-90 days. It maintains large raw material inventory since certain raw materials required for production need to be imported due to high lead time. With increasing revenue, the working capital requirement is expected to further increase, and its management will remain monitorable.
Volatile margin: The operating margin was volatile at 11-16% over the four fiscals through March 2024 and dipped to 6.1% in the first half of fiscal 2025. This is on account of higher employee cost, elevated subcontracting expenses driven by higher inflation in Poland and increase in employee stock ownership plan (ESOP) expenses in fiscal 2024. Furthermore, the operating margin was impacted by the aluminium die casting business, which reported operating loss in the first half of fiscal 2025 and is expected to be under pressure over the next few quarters. Sustenance of the healthy operating margin will remain monitorable. |
Liquidity: Adequate Bank limit utilisation was negligible for the 12 months through October 2024. Annual cash accrual is expected at Rs 50-75 crore and will sufficiently cover the term-debt obligation of Rs 5 crore and Rs 20 crore in fiscals 2026 and 2027, respectively. The current ratio was healthy at 2.6 times as on March 31, 2024, and is expected at a similar level over the medium term. Liquidity is supported by cash and equivalent of Rs 208 crore as on September 31, 2024. |
Outlook: Stable CRISIL Ratings believes the Rishabh group will sustain its market position over the medium term, backed by its large product basket, healthy relationships with customers, diversified markets and competent management. |
Rating Sensitivity Factors Upward factors:
Downward factors:
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About the company Incorporated in 1985, RIL manufactures, designs and develops ICPs such as transducers, analogue and digital panel meters, and electronic testing and measurement instruments such as hand-held multimeters, and digital and analogue insulation testers. It also manufactures aluminium high-pressure die-casting through its subsidiary. It has manufacturing facilities in Nashik, Poland and China, with modification centres in the United States and the United Kingdom. The group is promoted by Mr Narendra Goliya. It is listed on the National Stock Exchange and Bombay Stock Exchange. |
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 | ||||||||||||||||
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Criteria Details
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