India Ratings (FITCH) Assigns ‘IND A’: Outlook Stable, Credit Rating To Existing Exposure Of Hi-Tech Pipes Bank Facilities

The stock gave multibagger returns of over 150 per cent from its 52-week low of Rs 74.47 per share and a whopping 1,000 per cent in 5 years.

Hi-Tech Pipes Ltd., one of the leading steel tubes and pipes manufacturers in India, announced that it has been assigned with the following credit rating for the existing exposure pertaining to SVC Bank by India Ratings and Research Pvt Ltd.

Detailed Rationale of the Rating Action:

Strong Revenue and Volume Growth in FY24: Hi-Tech Pipes consolidated revenue grew 13 per cent YoY to INR 26,993 million in FY24 (FY23: INR 23,858 million), led by a 21 per cent increase in its net sales volume to 3,91,087 metric tonnes (MT; 3,54,000MT). In 1QFY25, the company reported sales volume increased 45 per cent YoY or 13 per cent QoQ to 1,22,155 MT (4QFY24: 1,07,721MT; 1QFY24: 84,429 MT),

Diversified Product Portfolio: The company operates through four primary segments: steel tubes and pipes, galvanised and corrugated sheets, cold-rolled products, and colour-coated sheets, catering to various sectors. The company’s customer concentration risk is low with the top 10 customers forming 24% of the consolidated revenue in FY24. is geographically diversified and has over 500 dealer-distributor networks across India. The company has six plants across four states.

Improvement in Credit Profile: India Ratings expects an improvement in Hi-Tech Pipes's financial risk profile over the medium term, driven by a likely improvement in the cash flow from operations, and debt prepayments made by the company 1HFY25.

Increased Scale of Operations and Capex Plans: The company has an installed capacity of 1,75,000 tonnes per annum (TPA) in Sanand-II. The second phase, which is under development, is likely to add a further 1,10,000TPA of pipes and tubes. The capex would commence operations by end-FY25. The facility would produce electric resistance welded (ERW) pipes, expanding the company’s value-added product portfolio. Additionally, the company is undertaking a greenfield expansion at its Sikandrabad facility (unit-II) for producing steel tubes and pipes, with a proposed capacity of 1,50,000TPA, which would likely begin operations by end-FY25. Ind-Ra expects the company to achieve robust growth in its revenue and sales volume over the medium term, driven by the ramp-up of its operations at the newly added capacities.

Commenting on the occasion, Mr. Ajay Kumar Bansal, Chairman of Hi-Tech Pipes Ltd, said: We view this rating as an upgrade of our existing credit rating from CRISIL ratings. The enhanced rating strengthens our financial position and provides us with increased flexibility to support our ongoing margin expansion initiatives. We are committed to maintaining our focus on delivering superior financial performance and maintaining high standards of corporate governance while managing risks effectively.

Earlier, the company achieved a major milestone with a Rs 105 crore order from key players in India's renewable energy sector. The order for ERW Steel Pipes solidifies the company's position as a leading manufacturer of steel tubes and pipes in the country. This significant development reflects the growing reliance on renewable energy sources and the critical role of high-quality steel components in supporting this transition. To fulfil this substantial order, Hi-Tech Pipes will utilize its newly established, state-of-the-art manufacturing facility in Sanand Unit II Phase I. Equipped with advanced technology and optimized production processes, this plant is designed to meet the demanding quality standards of the renewable energy industry. The company expects to complete the order within three months, demonstrating its efficiency and commitment to timely delivery.

Hi-Tech Pipes Ltd is a dominant player in India's steel industry, producing and distributing a vast array of steel products through an expansive network of over 5,000 retail outlets. Catering to a diverse clientele, the company's influence spans critical sectors including infrastructure, construction, automotive, energy and defence. Built on a strong foundation of branding and manufacturing excellence, Hi-Tech Pipes has experienced substantial growth, operating from six advanced manufacturing facilities with a combined capacity of 7,50,000 MTPA. The company's strategic expansion plans aim to elevate production to 1 million tons by the end of FY25, solidifying its market leadership position through popular brands like Alshakti, Organic, Shakti and Casewell.

Today, shares of Hi-Tech Pipes Ltd gained 0.35 per cent to Rs 187.80 per share from its previous closing of Rs 187.15 per share. The company has a market cap of over Rs 2,800 crore. In July 2024, FIIs bought FIIs bought 1,24,80,000 shares and increased their stake to 8.72 per cent compared to 1.82 per cent in June 2024. The stock gave multibagger returns of over 150 per cent from its 52-week low of Rs 74.47 per share and a whopping 1,000 per cent in 5 years. Investors should keep an eye on this Small-Cap stock.

Disclaimer: The article is for informational purposes only and not investment advice. 

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