Stock Report

CRISIL reaffirms ratings of Hitachi Energy India Limited

Posted On : 2023-09-04 21:30:50( TIMEZONE : IST )

CRISIL reaffirms ratings of Hitachi Energy India Limited

CRISIL Ratings has reaffirmed its 'CRISIL AAA/Stable/CRISIL A1+' ratings on the bank loan facilities of Hitachi Energy India Limited.

The ratings reflect the healthy business risk profile of the company, driven by its strong market position in the power grid segment, diversity in product portfolio and geographical reach, and a strong clientele. It also reflects the robust financial risk profile, as reflected in large networth of Rs 1,182 crore as on March 31, 2023, and comfortable debt in relation to its operations. The ratings factor in strong support from the ultimate parent - Hitachi Ltd (Hitachi) (rated 'A/Stable/A-1' by S&P), which holds ~100% stake in Hitachi Energy Ltd. (effective December 2022), which is the holding company of Hitachi Energy India Limited.

On February 21, 2023, S&P revised the outlook from 'Negative' to Stable' on the ratings of Hitachi Ltd and reaffirmed the long term 'A' and short term 'A-1' rating.

Operating income stood at Rs 4,469 crore for the fiscal 2023, while the operating margin was 5.6% as against 7.1% for 15 month ended March 2022. HEIL's margins were impacted over past 5-6 quarters on account of semiconductor chip supply issues, high commodity prices like copper and aluminum and high freight charges. CRISIL expects the margins to improve in near to medium terms basis expected improvement in semiconductor supply in H2FY24 leading to better execution, benefit driven from cooling off of commodity prices from end of fiscal 2023 and better margins from execution of orders received over last year factoring in higher commodity prices.

Despite economic and supply chain disruptions, the company has also maintained a strong business risk profile, driven by its established market position and improved order book of Rs 7,071 crore as on March 31, 2023 (March 31, 2022: Rs 4,672 crore). Liquidity too is adequate, marked by unencumbered cash equivalent of Rs 163 crore as on March 31, 2023, and access to fund-based bank limit of Rs 838 crore as on Jun 30, 2023, which remains moderately utilized.

These strengths are partially offset by susceptibility to capital investment cycles and project implementation risk, largely arising from structural issues in the power sector and intense competition in the capital goods industry.

Shares of Hitachi Energy India Limited was last trading in BSE at Rs. 4386.70 as compared to the previous close of Rs. 4380.45. The total number of shares traded during the day was 2156 in over 598 trades.

The stock hit an intraday high of Rs. 4433.30 and intraday low of 4313.85. The net turnover during the day was Rs. 9472122.00.

Source : Equity Bulls


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