Latest Credit Rating [ Revised HIL’s Outlook to IND]AA/Negative from [IND]AA/Stable] of the Company - Link
Noteworthy Points:
- HIL’s revenue from 4 business segments in FY23: flooring, roofing, polymer and building contributed 38%, 32%, 15%, and 15%, respectively (FY22: 44%, 30%, 15% and 11% respectively).
- Roofing solutions business EBITDA contribution has reduced to 55%-65% in FY23 (FY19: 72%)
- Risks Associated with Asbestos: With asbestos sheeting contributing to a significant portion of its revenue and profits, HIL is exposed to regulatory risk with regard to its usage. Asbestos mining is banned in India, and its use is permitted in asbestos-cement products only. Although the company operates within the approved levels, an adverse policy decision in the segment is likely to have a negative impact… Any adverse regulations in source countries could also affect supply of asbestos fibre. When there was a temporary ban on asbestos mining in Brazil in 2017, HIL managed to develop alternate, albeit less cost-effective, suppliers in Russia and Kazakhstan. Supplies from Brazil resumed in FY21, leading to an improvement in its profitability.
- Susceptibility to Fluctuations in Input Prices and End-user Industry Demand: Expenses incurred to procure raw materials (asbestos fibres, fly ash, cement, coal, among and others) comprise 55%-60% of the total revenue. Hence, volatility in input prices impacts profitability. However, the company has been able to partly mitigate the impact of the same through periodic price hikes. Moreover, demand is dependent on monsoons as most of HIL’s customers are individual home builders in rural areas.
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