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Check Before You Invest : Hind Rectifiers Ltd

BSE: 504036 NSE: HIRECT ISIN: INE835D01023
  |   Sector:  Capital Goods & Industrial Consumables   |   Industry:  Electric Equipment

Snapshot

Q.1 Which industry/sub-sector does Hind Rectifiers Ltd belong to?
Hind Rectifiers Ltd belongs to the Capital Goods & Industrial Consumables sector, operating specifically within the Electric Equipment segment.
Q.2 Is Hind Rectifiers Ltd a good quality company?
Hind Rectifiers Ltd is a average quality company, based on a somewhat consistent multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Hind Rectifiers Ltd undervalued or overvalued?
Hind Rectifiers Ltd appears Overvalued, as its key valuation ratios are higher than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 59.04 51.83
Price to Book 15.39 7.41
Price to Sales 3.59 2.02
EV to EBITDA 35.05 30.06
Q.4 Is Hind Rectifiers Ltd a good buy now?
Hind Rectifiers Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Hind Rectifiers Ltd?
Hind Rectifiers Ltd revenue growth is 26.6% for FY-2025, which is above its 5-year CAGR of 16.95%, indicating faster growth.

Q.2 Gross Profit margin of Hind Rectifiers Ltd?
Hind Rectifiers Ltd Gross profit margin which is the profit after deduction of direct costs, is 9% for FY-2025, which is above its 5-year median of 4.2%, indicating increasing margins.

Q.3 Operating Profit Margin of Hind Rectifiers Ltd?
Hind Rectifiers Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 10.83% for FY-2025, which is above its 5-year median of 6.93% indicating increasing margins.

Q.4 Net Profit Margin of Hind Rectifiers Ltd?
Hind Rectifiers Ltd Net Profit Margin is 5.69% for FY-2025, is above its 5-year median of 2.1%, indicating increasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 9 4.2
Operating Profit Margin (%) 10.83 6.93
Net Profit Margin (%) 5.69 2.1

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Hind Rectifiers Ltd?
Hind Rectifiers Ltd Return on Asset is 9.99%, which is above its 5-year historical median of 3.24%, indicating improved asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Hind Rectifiers Ltd?
Hind Rectifiers Ltd Return on capital employed is 22.35% for FY-2025, which is above its 5-year historical median of 10.12%. The current ROCE is above its estimated weighted average cost of capital (WACC) of 14%, indicating value creation.

Q.7 Return on Equity (ROE) of Hind Rectifiers Ltd?
Hind Rectifiers Ltd Return on equity is 26.28% for FY-2025, which is above its 5-year historical median of 7.54%, indicating the business is making better use of its shareholders capital.

Q.8 Cash conversion cycle of Hind Rectifiers Ltd?
Hind Rectifiers Ltd Cash conversion cycle is 81 days, below its 5-year historical median of 99 days, indicating improved working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 1.76 1.55
ROE (%) 26.28 7.54
ROCE (%) 22.35 10.12
Cash Conversion Cycle 81 days 99 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Hind Rectifiers Ltd?
Hind Rectifiers Ltd Debt-to-Equity ratio is 1.00, which is above the industry average of 0.29, indicating higher debt levels in the industry.

Q.10 Debt to cash flow from operations of Hind Rectifiers Ltd?
Hind Rectifiers Ltd Debt to cash flow from operations is 4.46, which is at a unhealthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Hind Rectifiers Ltd?

Q.1 Promoter shareholding and pledge status of Hind Rectifiers Ltd?
Promoters hold 43.93% of the Hind Rectifiers Ltd, with 6.81% of their stake pledged, indicating low pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Hind Rectifiers Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Hind Rectifiers Ltd vs industry peers?
Hind Rectifiers Ltd revenue CAGR is 16.95%, compared to the industry median CAGR of 13.01%, indicating faster growth and gaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) 26.6 13
Gross Profit Growth (%) 84.4 27.9
Operating Profit Growth (%) 69.1 28.4
Net Profit Growth (%) 184.6 28.5
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 1.76 1.06
ROE (%) 26.28 9.8
ROCE (%) 22.35 13.55
Cash Conversion Cycle (days) 81.43 99

Valuation & price assessment

Q.1 Stock return of Hind Rectifiers Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of 41.6% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR
41.6% 70.6% 108.7% 71.2%
Q.2 Valuation ratios of Hind Rectifiers Ltd vs historical?
The current P/E ratio of 59.04 is higher than its historical median of 51.83, indicating that the stock is trading above its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median
5-year
Industry Median
Price to Earnings 59.04 51.83 38.08
Price to Book 15.39 7.41 3.97
Price to Sales 3.59 2.02 2.75
EV to EBITDA 35.05 30.06 18.75

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