Crisil Ratings reaffirms ratings of Hirect at 'BBB/A2' with 'stable' outlook

Crisil Ratings stated that the ratings continues to reflect the extensive experience of the promoters in the power electronic equipment industry, strong orderbook providing revenue visibility and comfortable financial risk profile of the company.

These strengths are partially offset by large working capital requirement and exposure to risk posed by the tender-based nature of business and concentration in the end-user industry base.

The agency further said that significant increase in revenues of around 25-30% while maintaining stable operating margin, leading to higher cash accruals and improvement in the working capital cycle leading to improved liquidity could lead to a positive rating action.

However, a decline in revenues or lower than expected operating margin leading to lower cash accruals below Rs 27-28 crores on a sustained basis and stretched working capital cycle affecting the financial profile and liquidity of the company could result in an adverse rating action.

Hirect (formerly known as Hind Rectifiers) manufactures power electronic equipment, railway transformation equipment such as insulated gate bipolar transistors propulsion systems, hotel load converters, battery chargers, vehicle control units and electromechanical systems, which include panels, traction motors and heating, ventilation, and air conditioning systems.

The company had reported 26.23% decline in consolidated net profit to Rs 9.42 crore despite a 20.34% rise in revenue to Rs 258.45 crore in Q1 FY27 as compared with Q1 FY26.

The scrip fell 2.84% to currently trade at Rs 1242.40 on the BSE.

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