Rationale

 The rating reaffirmation continues to factor in Hawkins Cookers Limited's (Hawkins) position as one of the leading players in the pressure cooker industry with a strong brand franchise and vast experience of its management. Further, Hawkins' strong, pan India distribution network ensures a wide reach and mitigates any geographical concentration risk. The company's robust financial risk profile is reflected in its superior RoCE and strong cash generation ability, resulting in its net debt free status and strong debt protection metrics. The company reported healthy revenue growth of 25% in FY2022 owing to expansion in sales volume, driven by strong brand recall as well as higher realisations. The ratings, however, are constrained by the vulnerability of the company's profitability to volatility in raw material prices and intense competition from other leading national and regional players as well as from the unorganised sector. Hawkins has witnessed decline in operating margins over the last two fiscals to 12.5% in FY2022 (over 14.4% last fiscal year) from 15.6% in FY2020 owing to high raw material prices, which were not fully passed on to its clients. The ratings are also constrained by the company's relatively concentrated product portfolio and limited market size. Its ability to diversify its products into new categories to reduce its concentration on a single product category remains a key rating monitorable. ICRA's Stable outlook factors in the company's strong brand equity and leadership position in the pressure cooker and cookware market and a strong financial risk profile, as reflected in its healthy cash generation from operations, strong debt protection metrics and a comfortable liquidity position. In compliance with the circular (SEBI/HO/MIRSD/MIRSD_CRADT/P/CIR/2021/594) issued by the Securities and Exchange Board of India (SEBI) on July 16, 2021 and the subsequent circular (SEBI/HO/MIRSD/MIRSD_CRADT /P/CIR/2022/43) of April 1, 2022, for standardising the rating scales used by credit rating agencies, ICRA has discontinued the medium term rating scale, which was used to assign ratings to the fixed deposit programmes of entities. Accordingly, ICRA has migrated the rating currently outstanding for Hawkins' fixed deposit programme from the medium-term rating scale to the long-term rating scale. The medium-term rating scale of ICRA was a 14-point scale, while the long-term rating scale is a 20-point scale. The migration of the rating has resulted in a change in the rating symbol; however, this is to be construed only as a recalibration of the rating from one scale to another and not as a reflection of a change in the credit risk of the fixed deposit programme