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HCC
For 3QFY2011, HCC’s top line grew by 11.1% to `1,002.5cr (`902.6cr) v/s our estimate of
`994cr. OPM came in exactly as per our estimates and marginally below on a yoy basis at 12.6%
(13%). PAT declined by 46.2% yoy to `7.9cr (`14.8cr) against our estimate of `17.6cr. Poor
performance on the bottom-line front was due to foreign exchange loss of `6.1cr, higher tax rate
(40.7%) and swell in interest cost (~50% jump on a yoy basis), attributed by an increase in debt
levels and hardening of interest rates. During the quarter, HCC did not bag any orders, and
witnessed the cancellation of a `230cr order.
We expect HCC’s interest cost to increase on the back of higher debt requirements to meet its
working capital requirements and rising interest rates regime. Hence, we have revised downwards
our FY2011 and FY2012 earnings estimates by 21% and 12%, respectively. On the valuation
front, at current levels, the stock trades at 24.9x P/E and 1.6x P/BV on FY2012E basis. We have
valued HCC on an SOTP basis and have assigned 10x FY2012E earnings (standalone). The real
estate venture valued on NAV basis has also been discounted due to the uncertainties involved
with the Lavasa project. HCC’s BOT assets have been valued on DCF basis. We downgrade the
stock to Neutral from Buy.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
HCC
For 3QFY2011, HCC’s top line grew by 11.1% to `1,002.5cr (`902.6cr) v/s our estimate of
`994cr. OPM came in exactly as per our estimates and marginally below on a yoy basis at 12.6%
(13%). PAT declined by 46.2% yoy to `7.9cr (`14.8cr) against our estimate of `17.6cr. Poor
performance on the bottom-line front was due to foreign exchange loss of `6.1cr, higher tax rate
(40.7%) and swell in interest cost (~50% jump on a yoy basis), attributed by an increase in debt
levels and hardening of interest rates. During the quarter, HCC did not bag any orders, and
witnessed the cancellation of a `230cr order.
We expect HCC’s interest cost to increase on the back of higher debt requirements to meet its
working capital requirements and rising interest rates regime. Hence, we have revised downwards
our FY2011 and FY2012 earnings estimates by 21% and 12%, respectively. On the valuation
front, at current levels, the stock trades at 24.9x P/E and 1.6x P/BV on FY2012E basis. We have
valued HCC on an SOTP basis and have assigned 10x FY2012E earnings (standalone). The real
estate venture valued on NAV basis has also been discounted due to the uncertainties involved
with the Lavasa project. HCC’s BOT assets have been valued on DCF basis. We downgrade the
stock to Neutral from Buy.
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