BirlaNu Limited — Credit Ratings, 12-03-2025: Credit Rating- Revision

HIL Limited's credit rating has been downgraded to 'IND AA-' from 'IND AA' before its withdrawal by India Ratings & Research (Ind-Ra) based on the company's request, reflecting persistent weakness in its operating performance and credit profile. Despite previously expected gradual improvements, the company's performance remains significantly weaker, especially in FY25, due to ongoing challenges in its European business and declining domestic demand for roofing and building solutions.

The downgrade stems from a substantial drop in EBITDA and an increase in debt due to both organic and inorganic expansions, leading to deteriorating credit metrics. HIL's net leverage has risen sharply to 10x as of the first half of FY25, with net debt escalating to INR 6,351 million from INR 3,109 million in FY24. Investors may find comfort in HIL's diversified revenue streams and established market position, but ongoing cost management challenges and a weak demand environment could hinder recovery.

Considering these factors, investor sentiment may be cautious. The company's future performance hinges on recovering EBITDA, stable pricing, and improvements in both domestic and international demand. Therefore, maintaining a cautious stance appears prudent amidst these challenges while monitoring recovery signals in the medium term.