Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Interest expenses hurt bottomline…
HCC’ Q4FY11 results were largely in line with our expectation. While it
reported a healthy EBITDA margin at 13.8%, the interest outgo increased
2x YoY to | 90 crore. HCC’s order book stands at | 18,127 crore, 4.4x
FY11 revenues. Though the earnings of the construction business are
expected to remain under pressure in the near term on account of slower
revenue growth and rising interest expenses, we anticipate HCC’ stock
performance is likely to be driven by clarity on the Lavasa project. We
recommend HOLD on the stock with a price target of | 38.
Sharp increase in interest expenses
HCC’s Q4FY11 net profit declined 63% YoY as its interest expenses
expanded 2x YoY and 1.2x QoQ to | 90.3 crore as the company’s
debt has increased substantially to | 3471 crore in Q4FY11 vs. |
2515 crore in Q4 FY10. The rise in the debt was on account of
deterioration of working capital cycle (287 days in Q4 FY11 vs. 240
days in Q4FY10).
Order book stands at | 18,127 crore
HCC’s order book stands at | 18,127 crore, 4.4x FY11 revenues. The
order book consists of hydro (42%), transport (22%), water (20%)
and nuclear and others (16%). However, after adjusting for captive
orders, contentious orders such as Sawalkot and slow moving AP
orders, the order book to bill stands at 2.5x providing revenue
visibility of just over two years. The order inflow has been muted at
| 3371 crore in FY11 vs. | 5748 crore in FY10. The management has
indicated that in order to achieve revenue growth of 20% in FY12E,
it needs to have order inflow of | 6000-8000 crore.
Valuation
At the CMP, the stock is trading at 7.5x FY12 adjusted P/E and 1.4x FY12
P/BV. We recommend a HOLD rating on the stock with a price target of |
38 based on SOTP valuation. We have valued HCC’s construction
business at | 9 per share (7x FY13 EPS, investment in KSAG acquisition at
| 3 per share (0.9x P/BV), real estate at | 15 per share (at 50% discount to
its NAV) and BOT projects at | 11 per share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Interest expenses hurt bottomline…
HCC’ Q4FY11 results were largely in line with our expectation. While it
reported a healthy EBITDA margin at 13.8%, the interest outgo increased
2x YoY to | 90 crore. HCC’s order book stands at | 18,127 crore, 4.4x
FY11 revenues. Though the earnings of the construction business are
expected to remain under pressure in the near term on account of slower
revenue growth and rising interest expenses, we anticipate HCC’ stock
performance is likely to be driven by clarity on the Lavasa project. We
recommend HOLD on the stock with a price target of | 38.
Sharp increase in interest expenses
HCC’s Q4FY11 net profit declined 63% YoY as its interest expenses
expanded 2x YoY and 1.2x QoQ to | 90.3 crore as the company’s
debt has increased substantially to | 3471 crore in Q4FY11 vs. |
2515 crore in Q4 FY10. The rise in the debt was on account of
deterioration of working capital cycle (287 days in Q4 FY11 vs. 240
days in Q4FY10).
Order book stands at | 18,127 crore
HCC’s order book stands at | 18,127 crore, 4.4x FY11 revenues. The
order book consists of hydro (42%), transport (22%), water (20%)
and nuclear and others (16%). However, after adjusting for captive
orders, contentious orders such as Sawalkot and slow moving AP
orders, the order book to bill stands at 2.5x providing revenue
visibility of just over two years. The order inflow has been muted at
| 3371 crore in FY11 vs. | 5748 crore in FY10. The management has
indicated that in order to achieve revenue growth of 20% in FY12E,
it needs to have order inflow of | 6000-8000 crore.
Valuation
At the CMP, the stock is trading at 7.5x FY12 adjusted P/E and 1.4x FY12
P/BV. We recommend a HOLD rating on the stock with a price target of |
38 based on SOTP valuation. We have valued HCC’s construction
business at | 9 per share (7x FY13 EPS, investment in KSAG acquisition at
| 3 per share (0.9x P/BV), real estate at | 15 per share (at 50% discount to
its NAV) and BOT projects at | 11 per share.
No comments:
Post a Comment