Hind Rectifiers freezes at 10% upper circuit on order win from Indian Rlys

Shares of Hind Rectifiers were locked at the 10-per cent upper circuit on the BSE on Tuesday after the company bagged order from Indian Railways. At 10:45 AM, the shares were quoting at Rs 617.45 per share as against a 0.1 per cent gain in the BSE Sensex index.

According to the company's exchange filing, Hind Rectifiers has secured supply orders from Indian Railways worth more than Rs 200 crore for financial year 2024-25 (FY25).

Hind Rectifiers Ltd., is engaged in developing, designing, manufacturing, and marketing power semiconductors, power electronic equipments, and railway transportation equipments.

For the quarter ended December 2023, HRL reported net profit of Rs 1.52 crore, down 37.19 per cent year-on-year. Its sales, however, rose 40.52 per cent Y-o-Y to Rs 136.63 crore.

Last month, rating agency CRISIL reaffirmed its 'CRISIL BBB-' rating with 'Stable' outlook on Hind Rectifiers' long-term bank facilities. It also reaffirmed 'CRISIL A3' rating on short-term bank facilities due to the improvement in the business profile of the company supported by improved profitability and steady growth in scale. 

"The revenues as well as the operating margins are expected to improve marked by revenues of Rs 230 crore in H1FY24 as compared to Rs 150 crore a year ago. Further, operating margins have also improved to 7.5 per cent in H1FY24. The improvement in operating margins is due to improved product mix as well as backward integration measures implemented by the company. Steadily increasing scale backed by healthy demand while maintaining stable operating margins should continue to support the business risk profile over the medium term," CRISIL had said. 

Financial risk profile, it added, continues to remain comfortable with adequate liquidity.

While the rating continue to reflect the extensive experience of the promoters in the power electronic equipment industry, the strong order book providing revenue visibility, and the comfortable financial risk profile of the company, CRISIL cautioned that the strengths are partially offset by the large working capital requirement and exposure to risk posed by the tender-based nature of business and concentration in the end-user industry base.

Hind Rectifiers have expected annual cash accruals of Rs 17-18.5 crore which may help in repayment obligation of Rs 8-9.5 crore in fiscal 2025 and 2026. Bank limit utilisation is average at 77 per cent for the past six months through November 2023. Moderate gearing and healthy networth provide financial flexibility in case of any adverse conditions or downturns in the business.