India Ratings affirms ratings of High Energy Batteries with 'positive' outlook

High Energy Batteries (India) said that the credit rating agency India Ratings & Research has affirmed its rating on the fund-based limit of the company at 'IND BBB-' with 'positive' outlook.

The agency has also affirmed its rating on the non-fund-based limit of High Energy Batteries at 'IND A3.

India Ratings stated that the ratings reflect an improvement in HEBLs key credit metrics during FY24, despite weaker EBITDA margins and a reduction in FY24 revenue. However, the company remains an eminent supplier in silver zinc batteries.

The ratings remain constrained by the companys customer concentration risk, high working capital intensive nature of operations, modest scale of operations along with exposure to volatility in key input prices.

The 'positive outlook continues to reflect HEBLs strong credit metrics, strong EBITDA margins and likely growth in its orderbook in FY25 leading to an improvement in the revenue.

The rating agency further said that any significant increase in the scale of operations (either revenues or profitability), orderbook visibility along with maintaining the credit metrics with the net leverage staying below 2x and the interest coverage above 4x, all on a sustained basis, could result in a positive rating action.

However, a significant deterioration in the revenues or profitability and/or a further elongation of the working capital cycle or deterioration in the liquidity position, leading to the interest coverage reducing below 4x, all on a sustained basis, could lead to a negative rating action.

High Energy Batteries (India) is part of Esvin group and is engaged in the manufacturing of hi-tech batteries for use in army, navy, air force, satellite launch vehicles and commercial batteries for auto and standby valve regulated lead acid battery applications. The company also exports products to various countries such as Sri Lanka, Malaysia, Algeria, Italy and Kyrgyzstan.

The company's net profit declined 32.57% to Rs 4.70 crore on a 35.53% fall in sales to Rs 19.83 crore in Q4 FY24 over Q4 FY23.

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