Sample  write-ups  
 Hind Rectifiers   
Vol. No. : 17    Issue No. : 40                             Wednesday, March 13, 2019

Rising fortunes

Expanded product range and updated plants are helping the company in fully capitalising on surge in Railway capex

Related Tables
4Hind Rectifiers: Financials
4Hind Rectifiers: Results

Idea Hind Rectifiers
BSE Code 504036
BSE Group B
ISIN Demat INE835D01023
Bloomberg HREC@IN
Reuters HRCT.BO
Par Value Rs 2
52-week High/Low Rs 165 / Rs 97
Current Price Rs 119 on BSE and Rs 119 on NSE
(as on 13 March 2019)

Hind Rectifiers (Hirect) was founded in 1958, in collaboration with Westinghouse, Brake & Signal, U.K. It has long standing tradition and experience in developing, designing, manufacturing and marketing Power Semiconductor, Power Electronic Equipments and Railway Transportation Equipments.

Apart from Electrical, Mechanical, Electro Mechanical and Electronic products, Hirect, has also ventured into designing their own Software, thereby providing the customers with an absolute end to end solution that are tailored to their liking.

Long history

In the Year 1959-60, Hirect shifted the activities to the present location of 20,000sq. Meters campus at Bhandup, Mumbai.

The plant for manufacturing power Silicon diodes was imported from Westinghouse Brake & signal Co. Ltd. UK in the year 1966. Starting early 70's Hirect started Manufacture of equipments like battery chargers, High Voltage and High Current Rectifiers for Railway Applications were also started about the same time.

Supreme Powertronics Pvt. Ltd., Nashik which began operations as a sister concern around mid 80's was Amalgamated with HIRECT in 1995.

In the year 2001, new manufacturing facilities were created in Bhandup, Mumbai for manufacturing 25 KVA invertor to 180 KVA convertor for Indian Railways.

HIRECT entered its Golden Jubilee year from April 2007 and to commemorate the occasion Hirect Inaugurated two more plants at Dehradun, Uttarakhand on 13th April 2007 to manufacture power equipments for Railways.

Caters to the Indian Railways and Industrial Sector

The company caters to the Indian Railways and Industrial Sector, maintaining a very strong legacy and reputation in the respective industries. The primary customer continues to be Indian Railways. There is an increasing requirement of Locomotives and Coaches in the nation today.

The Railways Division of the Company is having several elements of products such as Electrical Equipment, Mechanical Equipment, Control Software and Electronics Equipment.

The Industrial Division of the Company is having products for the Anti Pollution and Environment Protection Industry such as Power Supplies for Electrostatic Precipitators and Custom made Rectifiers for any and every application.

The company’s business can be further trifurcated in to Equipment division, Traction division and Components division.

Equipment division which manufactures ESP, Loco Transformers, Water Cooled Rectifiers, TCR contributes to substantial share in the total sale and is poised for growth.

The Division offers complete solutions in design, manufacturing and services in the field of power electronic equipments for aviation, power, telecommunication and various industrial plants. Specialised services such as customisation, automation, optimisation and safety are further examples of the extensive scope offered. The Division can draw on many years of extensive expertise in Electrical Engineering and Technology. A wealth of experience has also been gathered in the design and Implementation of control systems. These Systems play a decisive role in monitoring, management and control of power electronic equipments in a network. In recent years with systems becoming larger and more complex, the division has apart from technical expertise, brought in interdisciplinary knowledge and experience. Hirect's equipments have successfully become a part of Industry standards.

Traction division which manufactures Inverters, Converters and other Railway Products is growing too.

A good and efficient transport system is indispensable for economic growth and national development. Both Semiconductor and Equipment Divisions work in the form of Interdisciplinary co-operation and offer custom-built solutions. They have a long standing experience in surface and underground transport systems. New transport systems require updating of technology and Hirect's experience has grown steadily with the absorption of new technology to keep pace with demand and involvement in important transport projects of the Railways, Mass Transit Projects and Metropolitan Transport Systems.

Components division is in the business of Semi Conductors devices which are mainly used for captive consumption for manufacturing Rectifiers. This vertical is also growing.

The Division has done Pioneering work in the development and manufacture of power semiconductor devices and offer a comprehensive range in various packages. to complement this, a full range of heatsink assemblies using IEC Circuit configuration as well as custom design is available. Hirect Semiconductor devices have gained a wide reputation for quality, in industrial, military and transportation application.

To keep pace with the development of power electronics, Hirect has extended the range of stud based and capsule devices to include a family of isolated base power modules. These modules conform to international outline with a variety of diode and thyristor combination arrangement offering enhanced thermal and mechanical properties.

To serve the sophisticated market, Hirect has invested extensively in the Quality testing systems to ensure international quality & reliability. The test facility is also used in rating and interpretation of device performance

Besides, AMC is a very important vertical for the company, since the margins are better although the volume is lower. The management expects this segment to grow substantially.

Trading division is in the business of imported Capacitors and Fuses and is showing good growth and the margins are also improving.

Its core strength remains in providing top class technology products with excellent after sales service through three manufacturing plants and service network PAN India.

Niche products

The company continues to be in the niche space of Power Electronics and DC wound products. Although the market size of the industry is not as large as the general industries but still has good mix of small, medium, large and multinational place in the market.

The company is confident that the industry size will gradually increase due to greater requirements from Indian Railways, Metro and Mono Rail projects being planned all over India.

The customer of the company mainly Indian Railways continues to ask for higher technology products. There is more focus on 3 Phase technology which is more cost and energy efficient.

The company has a strong brand and leadership position. Equipments of 3 Phase Locomotives, Pollution controlled equipments has a great potential considering the new policies of the government. Demand of the pollution controlled equipments in the Middle East is also increasing.

Railways account for major portion of total sales

Railways account for around 65% of total sales while rest comes from various sectors such as cement, steel and other industrials. The main customer, Indian Railways, is upgrading its technology and replacing old equipments, this offers huge opportunities for increasing business with them.

Railways have started ordering and investing in business. Also some orders from private players including the Metro orders where DC/AC work is required have been received by the company.

December 2018 quarter results – sales soar 135% and PAT rockets 377%

For the quarter ended Dec 18, the company reported net sales of Rs 68.53 crore, up by 135%. OPM was up by 70 bps to 10.1%, resulting in the OP growth of 151% to Rs 6.91 crore. Other income was up by 20% to Rs 0.06 crore. Interest costs was higher by 15% to Rs 1.85 crore and depreciation was higher by 32% to Rs 0.70 crore. Thus, PBT was up by 570% to Rs 4.42 crore. There was an EO income of Rs 0.48 crore pertaining to profits on sale of one unit of Dehradun plant in Dec 18 quarter as compared to Nil for Dec 17. Thus PBT after EO stood at Rs 4.90 crore up by 642% YoY. After providing total tax of Rs 1.75 crore, PAT for the Dec 18 quarter stood at Rs 3.15 crore, up by 377% YoY.

Nine months results – sales soar 140% and PAT jumps to Rs 6.83 crore against a loss of Rs 1.88 crore

For 9 months ended Dec 18, net sales were up by 140% to Rs 171.21 crore. OPM was up by 530 bps to 9.7%, thus resulting in a 422% increase in OP to Rs 16.56 crore. Other income was down by 13% to Rs 0.20 crore. After providing interest cost of Rs 5.13 crore, up by 37% and depreciation cost of Rs 2.05 crore up by 33%, PBT stood at Rs 9.58 crore as compared to loss at PBT of Rs 1.88 crore for 9 months ended Dec 17. There was an EO income of Rs 0.48 crore for 9 mths ended Dec 18 pertaining to profit on sale of unit of Dehradun plant as compared to Nil for 9 mths ended Dec 17 period. Thus PBT after EO stood at Rs 10.06 crore. After providing total tax of Rs 3.23 crore, PAT for 9 months ended Dec 18 stood at Rs 6.83 crore as compared to loss of Rs 1.88 crore for 9 mths ended Dec 17 period.

Confident management

Commenting on the company's performance, Suramya Nevatia, Chief Executive Officer, Hind Rectifiers said, 'We are delighted to deliver yet another profitable quarter with strong numbers. Our focus on R&D has increased substantially, thus enabling us to enhance our product offering with cost effective and innovative products. We are in line with our growth estimates and are looking to expand through global strategic partnerships.'

In its annual report S. K. Nevatia Chairman & Managing Director informs that after struggling for last few years, the company turned profitable in the FY 2018. It will continue to capitalise and build further on this momentum in the existing financial year with a strong order book position and a variety of new products added to its expansive product offering.

This coupled with its 2 recently upgraded plants at Nasik and Dehradun will ensure world class quality products delivered to customers on time.

The CMD has assured that the future is very promising and shareholders will not be disappointed.

Bags orders of Rs 88.05 crore: pending order book at all time high at Rs 292.92 crore

The company bagged orders of Rs 88.05 crore in December 2018.

This includes substantial orders from Diesel Locomotive Works worth Rs 61 crores. With these order wins, the company has a strong all time high pending order book of Rs. 292.92 crore.

Commenting on the order, Suramya Nevatia, CEO, Hind Rectifiers Ltd. said, "The orders booked are for a new product which was launched last year. Through backward integration, the company is able to substantially reduce import cost for the product, thereby helping the product margin to be upwards of 10%.

The Company is highly focused on R&D and the future of Hirect is power packed with innovation and diversification."

Has added new capacities to cater to the growing demand

The company continues to focus on development of new products for Railways and also for other applications.

Expansion plan undertaken at Nashik for manufacture of Railway as well non Railway products was completed during FY 2018. The company is planning further expansion of its product range, this will help for further improving the performance.

It has also automated other plants.

Buoyant outlook

Hirect is gradually transforming from being just a cost effective manufacturing company to an indigenous technology company. With India being at the crux of infrastructural and transportation growth, there are exponential possibilities, and Hirect will be capitalising on all the right ones.

The Government has aggressively targeted more electrification of routes and modernization of Railways facilities. A lot of initiatives have been taken to upgrade the ageing infrastructure and enhance the quality of service of the Railways. This should benefit Hirect.


On tiny equity of Rs 3.31 crore and face value of Rs 2 per share we expect the company to register EPS of Rs 6.1 and Rs 8.0 in FY 2019 and FY 2020 respectively. The scrip trades at Rs 119. P/E on FY 2020 projected EPS works out to 14.9.


Hind Rectifiers: Financials
  1203 (12) 1303 (12) 1403 (12) 1503 (12) 1603 (12) 1703 (12) 1803 (12) 1903 (12P) 2003 (12P)
Sales 117.94 136.22 96.72 93.97 93.94 111.34 125.70 241.84 302.30
OPM (%) 13.4% 10.4% -3.6% -2.6% 2.2% 4.3% 7.4% 9.9% 10.2%
OP 15.82 14.17 -3.52 -2.47 2.06 4.84 9.27 24.05 30.83
Other inc. 0.24 0.24 0.46 0.37 0.61 0.60 0.49 0.40 0.40
PBIDT 16.06 14.41 -3.06 -2.10 2.67 5.44 9.76 24.45 31.23
Interest 1.58 0.95 1.71 2.35 3.27 5.04 5.43 7.16 8.59
PBDT 14.48 13.46 -4.77 -4.45 -0.6 0.40 4.33 17.29 22.64
Dep. 2.40 2.35 2.29 1.47 1.58 2.00 2.31 2.88 3.17
PBT 12.08 11.11 -7.06 -5.92 -2.18 -1.60 2.02 14.41 19.48
EO 0.00 0.00 0.00 0.00 0.00 7.79 0.00 0.48 0.00
PBT after EO 12.08 11.11 -7.06 -5.92 -2.18 -9.39 2.02 14.89 19.48
Tax 1.40 0.97 -2.13 -2.35 -0.67 -2.58 0.70 4.77 6.23
PAT 10.68 10.14 -4.93 -3.57 -1.51 -6.81 1.32 10.11 13.24
EPS (Rs)* 7.1 6.7 - - - - 0.8 6.1 8.0
*Annualised on current equity of Rs 3.31 crore of face value of Rs 2 each
(P) :- Projections
Figures in crore
Source: Capitaline Databases


Hind Rectifiers: Results
  1812 (03) 1712 (03) Var. (%) 1812 (9) 1712 (9) Var. (%) 1803 (12) 1703 (12) Var. (%)
Sales 68.53 29.15 135% 171.21 71.37 140% 125.70 111.34 13%
OPM (%) 10.1% 9.4%   9.7% 4.4%   7.4% 4.3%  
OP 6.91 2.75 151% 16.56 3.17 422% 9.27 4.84 92%
Other inc. 0.06 0.05 20% 0.20 0.23 -13% 0.49 0.60 -18%
PBIDT 6.97 2.80 149% 16.76 3.40 393% 9.76 5.44 79%
Interest 1.85 1.61 15% 5.13 3.74 37% 5.43 5.04 8%
PBDT 5.12 1.19 330% 11.63 -0.34 LP 4.33 0.40 LP
Dep. 0.70 0.53 32% 2.05 1.54 33% 2.31 2.00 16%
PBT 4.42 0.66 570% 9.58 -1.88 LP 2.02 -1.60 -226%
EO 0.48 0.00 0% 0.48 0.00 0% 0.00 7.79 0%
PBT after EO 4.90 0.66 642% 10.06 -1.88 LP 2.02 -9.39 122%
Tax 1.75 0.00 0% 3.23 0.00 0% 0.70 -2.58 127%
PAT 3.15 0.66 377% 6.83 -1.88 LP 1.32 -6.81 119%
EPS (Rs)* # #   # #   0.8 -  
*Annualised on current equity of Rs 3.31 crore of face value of Rs 2 each
Figures in crore LP: Loss to Profit PL: Profit to Loss
Source: Capitaline Databases