Hindustan Construction Company - A One-Off Booster; Result Update Q3FY15 ::Edelweiss

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Hindustan Construction Company’s (HCC) Q3FY15 profit came in at INR271mn (our estimate INR504mn loss) aided by settlement of claims on certain projects. As per the management, ~INR20bn claims have been settled in favour of the company, of which INR3.7bn cash has been realised since FY13. Top line improved 28.5% YoY to INR10.9bn; reported EBITDA margin at 18.9% declined 167bps YoY. Fund raising and stake sale in real estate/BOT assets are necessary to check high leverage and interest costs.

One-offs continue to boost profitability

HCC’s Q3FY15 revenue came in at INR10.9n (our estimate INR10.0bn) with one-off claims boosting top line. Adjusted for claims approved, revenue would have been lower than our estimate. Adjusted EBITDA margin stood at a healthy ~14.3%. With the company sitting on ~INR20bn of approved claims, we expect profitability in the coming quarters to also get a boost from such claims recognition.

Signs of pick up in order book

The company ended Q3FY15 with an order book of INR143bn (INR137bn in Q2FY15). It has bagged ~INR20.7bn fresh orders YTDFY15. In addition, HCC is L1 in ~INR12bn projects. Book-to-bill stands at 3.4x currently, imparting good revenue visibility.

LINK
https://www.edelweiss.in/research/Hindustan-Construction-Company--A-One-Off-Booster;-Result-Update-Q3FY15/28208.html