The shares of the leading Engineering, Procurement, and Construction, firm gained 14.5% to an intraday high of ₹45.62 per share on tuesday after Elara securities gave a strong upside of 42%.
On Tuesday, at 11:50 a.m., the company’s shares were trading at ₹44.18 a share, up 11.03 percent from the previous close price, the company has a market capitalization of ₹7,451 crores.
Hindustan Construction Company Limited (HCC) is the flagship company of Hindustan Construction Company Group (HCC Group) and is involved in engineering and construction of infrastructure projects such as dams, tunnels, bridges, hydro,nuclear and thermal power plants, expressways and roads, marine works, water supply, irrigation systems.
Hindustan Construction Company Ltd shares have increased by 49% over the past six months and by 133% over the past year.
As of the March quarter, the company has an order backlog of ₹10,475 crore. Of this, 48% of the revenue comes from transport projects, 20% from water projects, 6% from nuclear-based projects, and 26% from hydro projects.
Elara Securities has given the target price on the stock to ₹63, indicating an upside of 42 percent as compared to the current price level of ₹44.35 per share. CNBC TV 18 news reported.
From Q4 FY23 to Q4 FY24, the company experienced a significant 43% decrease in revenue, from ₹3,094 crores to ₹1,773 crores. Concurrently, net profit surged by an impressive 29%, climbing from ₹190 crore to ₹246 crore.
HCC’s expertise in executing complex and high-profile in-house projects, including 26% of India’s hydro power capacity and 60% of its civil nuclear power capacity, positions it well to seize the ₹1.5 lakh crore nuclear opportunity, according to Elara.
Elara’s note also highlighted that the recent upgrade in HCC’s credit ratings and the removal of restrictions on bank guarantee limits will enable the company to bid for new contracts. In December of last year, ICRA upgraded HCC’s rating from [ICRA] B with a stable outlook to [ICRA] BB with a stable outlook, driven by a significant increase in the company’s gross billings.
The brokerage stated that the company’s financial health has improved over the past decade, positioning it to reclaim its former glory.
At the beginning of the year, CARE Ratings upgraded HCC’s bank facilities rating from CARE D to CARE B+ with a stable outlook. This upgrade was based on the successful implementation of the debt resolution plan and the subsequent regularization of debt servicing.
Elara forecasts inflows of ₹9,000 crore for HCC in the financial year 2025, slightly below the company’s guidance of ₹10,000 crore, with an expected annual increase of 15% over the next two years. Elara anticipates HCC’s standalone revenue and EBITDA to grow at a compound annual Growth Rate (CAGR) of 20% each from financial year 2024 to 2027.
Additionally, the brokerage projects an earning CAGR of 50% for HCC between financial year 2024 and 2027, attributed to reduced interest costs.
Written by Omkar Chitnis
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