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For 2QFY2012, HCC’s numbers came in much lower than our and street
expectations. As of 2QFY2012, the company’s total outstanding order book
stands at `16,175cr (excluding L1 orders of `2,077cr), with no order inflow
during the quarter. Owing to HCC’s poor performance in 2QFY2012 and given
the headwinds faced by the infrastructure sector, we are revising our estimates
downwards for FY2012 and FY2013. Further, owing to concerns such as
uncertainty on Lavasa project, slowdown in order inflow, high debt and stretched
working capital, we remain Neutral on the stock.
Abysmal performance on all fronts: On the top-line front, HCC’s revenue
declined by 6.3% yoy to `828.6cr (`884.6cr), against our estimate of `946.5cr,
due to slowdown in execution. EBITDAM came in at 11.3% (12.8%), a dip of
150bp yoy and lower than our estimate of 13.2% on account of commodity price
pressures and fixed overheads not covered by lower revenue. On the earnings
front, HCC reported a loss of `40.5cr vs. profit of `12.1cr in 2QFY2011, against
our estimated loss of `7.4cr. Shocking performance on the bottom-line front was
due to lower revenues, compression on EBITDA margin front and higher interest
cost (`107.4cr, 60.2%/15.2% yoy/qoq jump).
Outlook and valuation: On the valuations front, at current levels, the stock trades
at 41.0x PE and 1.2x P/BV on FY2013E standalone basis. We have valued HCC
on an SOTP basis with a fair value of `44/share by assigning 6x FY2013E
earnings (standalone). The company’s real estate venture has been valued on
NAV basis and its BOT assets have been valued by giving a 30% discount to P/E
deal. Our fair value implies an upside of 65.3% from current levels, but we
continue to maintain our Neutral recommendation on the stock, owing to
concerns mentioned above. Further, in the infrastructure space, we believe there
are better bets than HCC such as L&T and Sadbhav.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 2QFY2012, HCC’s numbers came in much lower than our and street
expectations. As of 2QFY2012, the company’s total outstanding order book
stands at `16,175cr (excluding L1 orders of `2,077cr), with no order inflow
during the quarter. Owing to HCC’s poor performance in 2QFY2012 and given
the headwinds faced by the infrastructure sector, we are revising our estimates
downwards for FY2012 and FY2013. Further, owing to concerns such as
uncertainty on Lavasa project, slowdown in order inflow, high debt and stretched
working capital, we remain Neutral on the stock.
Abysmal performance on all fronts: On the top-line front, HCC’s revenue
declined by 6.3% yoy to `828.6cr (`884.6cr), against our estimate of `946.5cr,
due to slowdown in execution. EBITDAM came in at 11.3% (12.8%), a dip of
150bp yoy and lower than our estimate of 13.2% on account of commodity price
pressures and fixed overheads not covered by lower revenue. On the earnings
front, HCC reported a loss of `40.5cr vs. profit of `12.1cr in 2QFY2011, against
our estimated loss of `7.4cr. Shocking performance on the bottom-line front was
due to lower revenues, compression on EBITDA margin front and higher interest
cost (`107.4cr, 60.2%/15.2% yoy/qoq jump).
Outlook and valuation: On the valuations front, at current levels, the stock trades
at 41.0x PE and 1.2x P/BV on FY2013E standalone basis. We have valued HCC
on an SOTP basis with a fair value of `44/share by assigning 6x FY2013E
earnings (standalone). The company’s real estate venture has been valued on
NAV basis and its BOT assets have been valued by giving a 30% discount to P/E
deal. Our fair value implies an upside of 65.3% from current levels, but we
continue to maintain our Neutral recommendation on the stock, owing to
concerns mentioned above. Further, in the infrastructure space, we believe there
are better bets than HCC such as L&T and Sadbhav.
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