Hind Rectifiers shares hit upper circuit after securing order from Indian Railways

Hind Rectifiers’ shares hit the 10% upper circuit on the BSE Tuesday following an order win from Indian Railways. Shares were trading at Rs 617.45 each, compared to a 0.1% gain in the BSE Sensex index.

As per the company’s exchange filing, Hind Rectifiers has secured supply orders from Indian Railways exceeding Rs 200 crore for FY25.

Hind Rectifiers Ltd. develops, designs, manufactures, and markets power semiconductors, power electronic equipment, and railway transportation equipment.

For the quarter ending December 2023, HRL recorded a net profit of Rs 1.52 crore, marking a 37.19% year-on-year decline. However, its sales surged by 40.52% year-on-year to Rs 136.63 crore.

Last month, CRISIL reaffirmed its ‘CRISIL BBB-‘ rating with a ‘Stable’ outlook for Hind Rectifiers’ long-term bank facilities. It also upheld a ‘CRISIL A3’ rating for short-term bank facilities, reflecting the company’s improved business profile, supported by enhanced profitability and consistent growth.

“Revenues and operating margins are anticipated to notably improve, with revenues reaching Rs 230 crore in H1FY24 compared to Rs 150 crore the previous year. Additionally, operating margins increased to 7.5% in H1FY24. This improvement is attributed to a better product mix and backward integration initiatives implemented by the company. The company’s steady growth in scale, driven by robust demand while maintaining stable operating margins, is expected to uphold the business’s risk profile over the medium term,” stated CRISIL.

CRISIL noted that the company maintains a comfortable financial risk profile with sufficient liquidity. While the ratings reflect the promoters’ extensive experience in the power electronic equipment industry, a strong order book, and a comfortable financial risk profile, CRISIL warned about challenges including large working capital requirements, exposure to tender-based business risks, and concentration in end-user industries.

Hind Rectifiers anticipates annual cash accruals of Rs 17-18.5 crore, which could aid in meeting repayment obligations of Rs 8-9.5 crore in fiscal 2025 and 2026. The company’s bank limit utilization averaged 77% over the past six months through November 2023. Moderate gearing and a healthy net worth provide financial flexibility to address adverse conditions or business downturns.

How did Hind Rectifiers perform in the third quarter?

On February 8, the company unveiled its Q3 results, revealing a net profit of Rs 1.52 crore for the October-December period, down from Rs 2.4 crore a year ago. Revenue from operations for the third quarter rose to Rs 136.63 crore, compared to Rs 97.23 crore in the same quarter of the previous fiscal year. Total income for the quarter reached Rs 136.71 crore, up from Rs 97.27 crore a year ago.

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