InvestorQ : What is your view on Hindustan Aeronautics (HAL) and would the recent credit downgrade impact the stock?/
Neelam Naik made post

What is your view on Hindustan Aeronautics (HAL) and would the recent credit downgrade impact the stock?/

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NISHA Nayak answered.
2 years ago
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The stock has been under a lot of pressure after its listing on the bourses, despite being available at a reasonably cheap valuation of 8X P/E. You are right that Care Ratings has downgraded long- and short-term bank facilities of Hindustan Aeronautics worth Rs.7,300 crore to AA ‘plus’ with a stable outlook. The downgrade has been on account of change in operating environment involving reduced advance funding by customers and build-up of receivables position compelling the company to increasingly rely on working capital debt.

Earlier, HAL used to receive significant advance funding and milestone payments resulting in negligible borrowings and robust liquidity. However, in the current fiscal year, delays in disbursement of sanctioned budget resulted in high receivables position and reduced cash balances. HAL specializes in aircraft manufacturing and providing Maintenance, Repair and Overhauling services (MRO) and remains an important player in India’s defence programme.

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