Ind Ra upgrades Hindustan Foods' long-term issuer rating to 'A+/Stable'

8 Mar 2022 , 03:31 PM

India Ratings and Research (Ind-Ra) has upgraded Hindustan Foods Limited’s (HFL) Long-Term Issuer Rating to ‘IND A+’ from ‘IND A’. The Outlook is Stable. The short-term ratings has been upgraded to IND A1+.

According to the rationale report, the upgrade reflects the sustained growth in HFL’s scale and profitability, driven by the commencement of its liquid detergent plant in Hyderabad, a home care liquid facility in Silvassa and a capacity expansion of its tea packing unit in Coimbatore (Tamil Nadu), coupled with the proposed inorganic and organic expansions underway, providing a visibility for its near- to medium-term growth.

The product diversification has increased with HFL’s entry into the healthcare and wellness and colour cosmetics segments, while its net leverage (net debt/EBITDA) has remained below 2.5x since FY20 and is likely to remain robust over the rating horizon.

The ratings continue to factor in its strong executional track record and resilient business model, with around 90%of its revenue emanating from long-term contracts. This ensures a guaranteed recovery of fixed costs including capital servicing costs.

Hindustan Foods ended at Rs1,802.20 apiece up by 1.34% on the BSE.