Multibagger Steel Pipes Stock To Keep Under Radar As Company Announces Credit Rating Upgrade By Crisil Ratings Ltd; Details Inside
The stock is up by 91 per cent from its 52-week low of Rs 97.60 per share and gave multibagger returns of over 1,000 per cent in 5 years.
Hi-Tech Pipes Ltd, one of the leading steel tubes and pipes manufacturers in India, is pleased to announce an upgrade in its credit rating for both its existing and proposed bank facilities by CRISIL Ratings Limited. This enhancement in rating underscores Hi-Tech Pipes strong financial position, operational efficiency, and the strategic growth initiatives that are driving the company forward in a dynamic steel pipe industry.
DETAILED RATIONALE OF THE RATING ACTION
Established market position: Industry presence of over three decades has helped the promoters develop a strong understanding of market dynamics, resulting in a diverse product profile, regular capacity enhancements and a wide distributor network. Products include tubes and pipes, cold-rolled strips and engineering products used in varied industries such as real estate, automotive and agriculture. A wide portfolio acts as a safeguard against downturns in any single segment. Revenue is expected to grow at a CAGR of 22 per cent in the three fiscals through 2025 to more than Rs 3,300 crore. The group is undertaking brownfield and greenfield expansion, along with the addition of new products, which will aid further diversification in geographical presence. Revenue is expected to grow at a healthy 20-25 per cent in the fiscal year 2026 and 2027, driven by volume growth on the back of enhanced capacity, improved geographic reach and expected healthy demand.
Efficient working capital management: The working capital cycle is supported by an efficient collection and inventory management system, resulting in moderate dependence on working capital limits. Gross current assets (GCAs) are expected in the range of 100-120 days as on March 31, 2025 (94 days as on March 31, 2024), driven by receivables of 30-40 days, inventory of 40-50 days and large cash and bank balance post the QIP. While growth in turnover may lead to an increase in working capital requirement, GCAs are expected to remain stable at 90-100 days over the medium term.
Strong financial risk profile: At the group level, the financial risk profile has significantly improved following a QIP through which HTPL raised Rs 500 crore in October 2024 and Rs 133 crore through conversion of share warrants in the first half of fiscal 2025. Networth is expected over Rs 1,200 crore as on March 31, 2025 (Rs 576 crore as on March 31, 2024). Debt prepayment and lower reliance on working capital debt will lead to improvement in the capital structure, with TOLTNW expected to be 0.3 times as on March 31, 2025 (1.05 times as on March 31, 2024). Reduction in debt, along with improved profitability, will likely lead to improvement in the debt protection metrics; interest coverage
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About Hi-Tech Pipes Limited.:
One of India’s leading steel processing companies, providing world-class innovative products for nearly four decades with a strong presence in steel pipes, hollow sections, tubes, Solar Torque Tubes, cold rolled coils & strips, road crash barriers, solar mounting structures, GP/GC Sheets, Colour Coated Coils and a variety of other galvanised products. The Company operates Six (6) state-of-the-art integrated manufacturing facilities located at Sikandrabad (UP), Sanand (Gujarat), Hindupur (AP) - near Bangalore, and Khopoli (Maharashtra), with an installed capacity of 7,50,000 MTPA, on a consolidated basis and is on its way to reaching 1million Tones Capacity in FY25. The company has a direct marketing presence in over 20 states with more than 450+ Dealers & distributors across India
According to Quarterly Results, revenue increased by 35 per cent to Rs 867.51 crore and net profit increased by 125 per cent to Rs 18.05 crore in Q1FY25 compared to Q1FY24. In its annual results, the company reported net sales of Rs 2,699 crore and net profit of Rs 44 crore in FY24.
The company has a market cap of over Rs 3,600 crore. In October 2024, FIIs bought 99,77,902 shares and increased their stake to 12.98 per cent compared to 9.31 per cent in September 2024. The stock is up by 91 per cent from its 52-week low of Rs 97.60 per share and gave multibagger returns of over 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.