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Execution remained muted with revenue coming 5% below our estimate at Rs11.6 bn. Order inflow in Q4FY12 remained subdued at Rs3.1 bn. The biggest negative surprise for the quarter came in the form of lower than expected OPM (7.6% V/s IDBIe of 12.0%). Consequently, EBITDA came 40% below estimate at Rs878 mn. HCC reported a net loss of Rs542 mn, against our estimate of Rs200 mn loss. Despite some improvement in execution, we expect HCC to continue to report a net loss in FY13/FY14. We have lowered our TP for HCC to Rs20 (Rs22 earlier) due to reduction in our target EV/EBITDA multiple to 4.5x (earlier 5x) and downward revision in our OPM estimates. Maintain REDUCE.
Key Highlights
Revenue 5% below estimate at Rs11.6 bn; order inflow remains weak
Revenue declined by 5% YoY to Rs11.6 bn, against our estimate of Rs12.1 bn. This is the third successive quarter when HCC has reported a YoY decline in revenue. Order inflow in Q4FY12 remained subdued at Rs3.1 bn (Rs18.9 bn in FY12). Consequently, O/B declined 6% QoQ to Rs153.4 bn.
OPM 440bps below estimate; EBITDA 40% below expectation
OPM at 7.6% was significantly below our estimate of 12% (11% in FY12). Consequently, EBITDA was 40% below estimate at Rs878 mn. The margin contraction is likely on account of business restructuring and distribution of overheads on the lower turnover. The management has guided for an EBITDA margin of 11.0% in FY13.
Net interest expense up 19% QoQ; Reported net loss of Rs542 mn
Net interest expense increased 19% QoQ to Rs1.2 bn and was in-line with our estimate. The company reported a net loss of Rs542 mn, against our estimate of Rs200 mn loss.
Subsidiary performance
Karl Steiner reported Revenue and PAT of Rs40bn and Rs158mn, respectively for FY12. The company has a current O/B of Rs82.9 bn. However, Lavasa and HCC Infra reported a net loss of Rs1.4 bn and 1.6 bn, respectively for FY12. HCC commenced tolling on the Dhule – Palasner BOT in Q4FY12 and the initial collections are in-line with management expectations. During the quarter, Lavasa launched 0.25msf of residential space, which the management claim got sold out completely.
Maintain REDUCE; TP revised to Rs20
Despite some improvement in execution, we expect HCC to continue to report net losses in FY13 and FY14. We have kept our subsidiary valuation estimate unchanged at Rs49 per share. However, our value for the standalone business stands revised to negative Rs29 per share (earlier negative Rs27) due to reduction in our target EV/EBITDA multiple to 4.5x (earlier 5x) and downward revision in our OPM estimates. Consequently, we have revised our TP for HCC to Rs20 (Rs22 earlier). We maintain our REDUCE rating on HCC.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Execution remained muted with revenue coming 5% below our estimate at Rs11.6 bn. Order inflow in Q4FY12 remained subdued at Rs3.1 bn. The biggest negative surprise for the quarter came in the form of lower than expected OPM (7.6% V/s IDBIe of 12.0%). Consequently, EBITDA came 40% below estimate at Rs878 mn. HCC reported a net loss of Rs542 mn, against our estimate of Rs200 mn loss. Despite some improvement in execution, we expect HCC to continue to report a net loss in FY13/FY14. We have lowered our TP for HCC to Rs20 (Rs22 earlier) due to reduction in our target EV/EBITDA multiple to 4.5x (earlier 5x) and downward revision in our OPM estimates. Maintain REDUCE.
Key Highlights
Revenue 5% below estimate at Rs11.6 bn; order inflow remains weak
Revenue declined by 5% YoY to Rs11.6 bn, against our estimate of Rs12.1 bn. This is the third successive quarter when HCC has reported a YoY decline in revenue. Order inflow in Q4FY12 remained subdued at Rs3.1 bn (Rs18.9 bn in FY12). Consequently, O/B declined 6% QoQ to Rs153.4 bn.
OPM 440bps below estimate; EBITDA 40% below expectation
OPM at 7.6% was significantly below our estimate of 12% (11% in FY12). Consequently, EBITDA was 40% below estimate at Rs878 mn. The margin contraction is likely on account of business restructuring and distribution of overheads on the lower turnover. The management has guided for an EBITDA margin of 11.0% in FY13.
Net interest expense up 19% QoQ; Reported net loss of Rs542 mn
Net interest expense increased 19% QoQ to Rs1.2 bn and was in-line with our estimate. The company reported a net loss of Rs542 mn, against our estimate of Rs200 mn loss.
Subsidiary performance
Karl Steiner reported Revenue and PAT of Rs40bn and Rs158mn, respectively for FY12. The company has a current O/B of Rs82.9 bn. However, Lavasa and HCC Infra reported a net loss of Rs1.4 bn and 1.6 bn, respectively for FY12. HCC commenced tolling on the Dhule – Palasner BOT in Q4FY12 and the initial collections are in-line with management expectations. During the quarter, Lavasa launched 0.25msf of residential space, which the management claim got sold out completely.
Maintain REDUCE; TP revised to Rs20
Despite some improvement in execution, we expect HCC to continue to report net losses in FY13 and FY14. We have kept our subsidiary valuation estimate unchanged at Rs49 per share. However, our value for the standalone business stands revised to negative Rs29 per share (earlier negative Rs27) due to reduction in our target EV/EBITDA multiple to 4.5x (earlier 5x) and downward revision in our OPM estimates. Consequently, we have revised our TP for HCC to Rs20 (Rs22 earlier). We maintain our REDUCE rating on HCC.
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