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Sunday, August 18, 2013

HCC back in black after eight quarters

This story first appeared in DNA Money edition on Saturday, Aug 3, 2013.

Analysts expected Hindustan Construction Company (HCC) to report increased losses for the first quarter (Q1, April-June). After all, losses have been plaguing the construction and engineering major for the last eight quarters.

But surprise, surprise, HCC reported a Q1 net profit of Rs 19.2 core. For perspective, here’s a tidbit: in Q1 of last fiscal, HCC’s loss was Rs 31 crore.

The stock market quickly cheered the news, sending HCC shares to the upper circuit limit in intra-day trade. HCC closed 20% up at Rs 9.60 on the NSE.

Total income increased 19% on-year to Rs 1,149 crore. Operating profit or Ebitda stood at Rs 201.2 crore (Rs 69.1 crore in Q1 of last fiscal). Ebitda margin was at 17.6%.

HCC management attributed the turnaround to operational efficiencies, cost control and pending claims from clients.

Praveen Sood, group CFO, said 40% of the turnover came from the NH-34 project in West Bengal and the Kishanganga tunnel project in Jammu and Kashmir.

HCC’s consolidated Q1 debt  was Rs 10,000 crore while standalone debt was Rs 4,600 crore. Its order book stood at Rs 13,970 crore, excluding contracts worth Rs 2,265 crore where it emerged as a preferred bidder and is hopeful of winning the orders by the year-end.

During Q1, HCC received around Rs 40 crore in claims from government agencies NHPC and the National Highways Authority of India.

As part of its asset monetisation plan, HCC is in advanced stages of divesting its 18 lakh square foot (msf) commercial development at 247 HCC Park, Vikhroli, Mumbai, for Rs 175 crore.

Sood said due diligence is currently on and the deal is likely to be closed soon. Construction activities at its Lavasa township project in Maharashtra is in full swing with 5,000 workers on ground.

During Q1, 110 residential units were sold and more than 500 apartments and villas have been completed.  With 1.9 lakh tourists visiting the hill station, HCC’s hotels there registered average occupancy of 70%.

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