Hindustan Aeronautics (HAL) declined after CARE Rating downgraded its rating on the bank facilities of the company.
The scrip fell 0.33% at Rs 720.30, extending recent losses. The stock hit the day's low of Rs 712.10, its lowest intraday level since 24 October 2019.
Shares of HAL corrected 10.41% in twenty-six sessions, from its closing high of Rs 804.05 on 20 November 2019.
On Thursday, 26 December 2019, CARE Ratings downgraded long-term banking facilities of Hindustan Aeronautics (HAL) worth Rs 7,300 crore to 'AA+' from 'AAA' with outlook unchanged at 'Stable'.
The rating revision of bank facilities of HAL factors in the change in operating environment involving reduced advance funding by customers and build-up of receivables position translating into increased reliance on working capital debt.
The ratings agency took cognizance of HAL's sustenance of PBILDT margins from operations and healthy order book. However, it also highlighted negative factors in the form of any significant fall in company's order book and substantial dilution of GoI stake in the company. Further, an increased reliance on bank borrowings could also result in deterioration of leverage.
On a consolidated basis, HAL's net profit surged 116.41% to Rs 621.71 crore on 32.2% increase in net sales to Rs 3,451.07 crore in Q2 September 2019 over Q2 September 2018.
Hindustan Aeronautics is engaged in carrying out design, development, manufacture, repair and overhaul of aircraft, helicopter, engines and related systems like avionics, instruments and accessories primarily serving Indian defence programme. It also manufactures the structural parts of various Satellite Launch Vehicles of the Indian Space Research Organization (ISRO).
Government of India (GoI) holds majority stake of 89.97% as on 30 September 2019.
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