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Hindustan Construction Company Ltd. Stock Analysis

Small Cap
Evaluated by 2612 users | BSE: 500185 | NSE: HCC |
Engineering - Construction
Hindustan Construction Company is a pre-eminent Indian infrastructure company, it was incorporated over eight decades ago. The HCC Group of companies comprise HCC Ltd (Engineering & Construction), HCC Infrastructure Ltd, HCC Real Estate Ltd (HREL) and Lavasa Corporation Ltd. The group...

Analysis of Financial Track Record

Data adjusted to bonus, split, extra-ordinary income, rights issue and change in financial year end
Financial track record gives insight into the company's performance on key parameters over the past ten years. MoneyWorks4me’s proprietary colour codes make it easy for retail investors to gauge the company’s past performance.
Hindustan Construction Company Ltd. has not performed well majority of the past ten years indicating its past ten year financial track record is not good
Value Creation
 Mar'10Mar'11Mar'12Mar'13Mar'14Mar'15Mar'16Mar'17Mar'18Mar'19
Return on Capital Employed 6.79%6.5%5.04%3.87%8.6%8.51%9.19%8.89%8.06%-26.74%
Growth Parameters
Growth Parameters Colour Code Guide
Net Sales (Rs. Cr.) 3,4133,9033,9913,8374,0434,1354,1914,1964,5754,341
Y-o-Y Gr. Rt.-14.4%2.3%-3.9%5.4%2.3%1.4%0.1%9%-5.1%
Adjusted EPS (Rs.) 1.320.99-1.58-2.331.261.041.350.690.75-13.03
Y-o-Y Gr. Rt.--25%-259.6%NANA-17.5%29.8%-48.9%8.7%-1837.3%
Book Value per Share (Rs.) 22.4522.5219.1517.218.4519.2720.7723.8824.528.55
Adjusted Net Profit 89.166.8-107-15785.175.21177885.3-1,972
Net Op. Cash Flow (Rs. Cr.) 34.4-9.81703425033833396391,318571
Debt to Cash Flow from Ops 73.06-367.3226.2313.559.5813.0714.846.882.835.78
Standalone financials take only the parent company into account while consolidated financials take into account financials of the parent company as well as of all its subsidiaries. In most companies consolidated financials should be used for analysis.
Hindustan Construction Company Ltd. should be analysed on a Standalone basis
CAGR
CAGR Colour Code Guide
  9 yrs 5 yrs 3 yrs 1 yr
Net Sales 2.7%1.4%1.2%-5.1%
Adjusted EPS -229%-259.6%-312.9%-1837.3%
Book Value per Share -10.2-14.3-25.6-65.1
Share Price -16.1% -21.1% -44.3% -37.2%
Key Financial Parameter
Performance Ratio Colour Code Guide
 Mar'10Mar'11Mar'12Mar'13Mar'14Mar'15Mar'16Mar'17Mar'18Mar'19
Return on Equity (%) 7.064.39-7.58-12.827.015.677.353.473.12-96.96
Operating Profit Margin (%) 13.1213.9211.159.8715.9218.9819.3918.0214.3212.39
Net Profit Margin (%) 2.611.71-2.67-4.12.11.822.81.861.86-45.43
Debt to Equity 1.662.363.443.983.863.612.791.631.342.55
Working Capital Days 439542649677629654723790769713
Cash Conversion Cycle 15522527630224820452-423187
Entity Percentage Holding
Promoters 34.71%
Institutions 31.83%
Non-Institutions 33.46%
Pledged *85.3885.3885.3091.7692.1792.1792.2392.1492.1492.14
* Pledged shares as % of Promoter's holding (%)

MoneyWorks4Me analysed the past 10-year performance of HCC and arrived at the following conclusion:

Past 10 year's financial track record indicates that HCC is a below average quality company. However, for specific investment actions please connect with your investment advisor.

The 5-year analysis of HCC's performance infers:

HCC earnings have declined by -259.6%, whereas share price has depreciated -21.1% CAGR over the past five years, indicating the company's share price is likely overvalued. However, for specific investment actions please connect with your investment advisor.

We analysed the performance of HCC share prices over the last 10 years. Here is what we found out:

HCC share price has depreciated -20.7% annually over the past ten years.

Hindustan Construction Company is a pre-eminent Indian infrastructure company, it was incorporated over eight decades ago. The HCC Group of companies comprise HCC Ltd (Engineering & Construction), HCC Infrastructure Ltd, HCC Real Estate Ltd (HREL) and Lavasa Corporation Ltd. The group specializes in technically complex, new-age infrastructure projects, as well as EPC, BOT, Integrated Projects and Townships.

HCC has, over the years, strongly anchored itself to India’s development

Hindustan Construction Company is a pre-eminent Indian infrastructure company, it was incorporated over eight decades ago. The HCC Group of companies comprise HCC Ltd (Engineering & Construction), HCC Infrastructure Ltd, HCC Real Estate Ltd (HREL) and Lavasa Corporation Ltd. The group specializes in technically complex, new-age infrastructure projects, as well as EPC, BOT, Integrated Projects and Townships.

HCC has, over the years, strongly anchored itself to India’s development efforts. It is now acknowledged as a company that continues to empower India, enabling the nation to surge ahead in different core sectors. At the heart of all development efforts is the attempt to touch and improve the quality of life of people across the length and breadth of the country.

HCC, as an industry leader in engineering construction, currently nurtures projects that span across such diverse segments as transportation, power, marine projects, oil and gas pipeline constructions, irrigation and water supply, utilities and urban infrastructure, all of which impact the nation of India, and the progress of its people.

This company with focus towards empowering the nation, currently spans across construction, real estate and infrastructure development fields, which form part of the backbone of any nation building effort.

The company has executed a majority of India’s landmark infrastructure projects, having constructed more than 25% of India’s hydro power, and over 50% of India’s nuclear power generation capacities, 2,227 km of roads and expressways and over 200 km of complex tunneling in addition to hundreds of bridges, dams and barrages.

HCC has remained at the forefront of India’s engineering construction industry with global management practices, which include acquiring international ISO certifications for management systems in Quality, Occupational Health & Safety and Environment. In fact, Environment Management is a key focus area for the company and it is implementing various initiatives through the government recognized Centre for Research and Development and Innovation (CRDI), such as use of fly ash in concrete that helps reduce carbon emissions and innovative techniques in pipeline joint testing.

Having established robust corporate governance norms, the company has also set global benchmarks in the construction industry with the fastest implementation of SAP-ERP coupled with high levels of complexity across 28 diverse project locations. The complex implementation of ERP at HCC’s hydroelectric projects under construction at altitudes of more than 11,000 feet in Leh, Jammu and Kashmir, remains the highest location of SAP-ERP operations in the world.

The company is only Indian signatory member of the United Nations’ CEO Water Mandate, which involves water management projects at grass root levels.

Subsidiary companies

  • HCC Infrastructure Ltd, a wholly-owned subsidiary of HCC Ltd, is engaged in developing infrastructure projects in growing sectors such as transportation; namely roads, bridges.
  • HCC Real Estate Ltd (HREL) is a 100% subsidiary of Hindustan Construction Company Ltd. (HCC). With inherent skills and resources to develop and execute high-value projects within  stringent compliances, HREL is helping build communities across India. HREL is proud to touch the lives of many.

Core Business:

HCC executes the construction of technically complex and high value projects across segments such as transportation, power, marine projects, oil and gas pipeline constructions, irrigation and water supply, utilities and urban infrastructure. These projects exhibit HCC’s premier trademark -- which is quality, excellence, and precision, turning them into engineering and construction marvels in their respective categories.1) Hydro  business Unit 2) Nuclear Power & Special projects Business Unit 3) EPC business Unit 4) Water Solution Business Unit and 5) Transportation Business Unit.

Milestones:

  • Feb 10, 2010: The company bags three contracts worth Rs 2,860 crore from National Highways Authority of India (NHAI)
  • Mar 04, 2010: Secures two orders worth Rs 299.36 crore from Hindalco Industries
  • Mar 12, 2010: HCC, in joint venture (JV) with Coastal Projects (CPP), secures orders worth Rs 197 crore from North Frontier Railway
  • May 06, 2010: Completes acquisition of 66% stake in Karl Steiner AG
  • May 13, 2010: Launch of Highbar Tech to tap IT opportunities in the Infra industry
  • May 25, 2010: Secures project from Nuclear Power Corp worth Rs 888 crore
  • June 08, 2010: Company’s arm signs MoU with Orascom Construction
  • June 10, 2010: The company sells its 74% stake in ‘247Park’ to IL&FS Milestone Fund
  • June 25, 2010: Secures EPC contract from Himachal Pradesh Power Corporation
  • June 28, 2010: Wins contract worth of Rs 126 crore from Hindalco Inds
  • Aug 10, 2010: Secures Rs 121.86 crore worth order from Hindalco Inds
  • Aug 23, 2010: The company’s wholly-owned subsidiary HCC Infrastructure mulls entering airport operation and building business
  • Sept 09, 2010: HCC, CPPL bags tunnel work worth Rs 312.82 crore
  • Sept 24, 2010: The company bags Rs 660 crore worth order from GMR Hydro Power
  • Dec 06, 2010: Signs two agreements with VINCI affiliates to jointly work on power and infrastructure Projects
  • Jan 12, 2010: The company inks MoU with Gujarat government at the Vibrant Gujarat Summit for an investment of Rs 12000 crore
  • Jan 13, 2010: The company enters the renewable energy sector
  • Feb 02, 2010: Secures Rs 345.30 crore EPC contract from Sardar Sarovar Nigam

Awards & Achievements:-

  • FY2009 -- Infrastructure Leader of the Year to Ajit Gulabchand under Infrastructure Excellence Awards 2009 in association with CNBC TV18.
  • Best Concrete Structure Award for the year
  • 2007-2008 -- To Gosikhurd Spillway Project, the award is conferred by the India Concrete Institute
  • Most Outstanding Bridge National Award for the year 2008 for the Bandra Worli Sea Link Project by an independent jury of bridge engineering experts from the Indian Institution of Bridge Engineers (IIBE).
  • FY2007 -- Golden Peacock Award for Excellence in Corporate Governance - 2007 conferred by the Institute of Directors (IOD), under the Chairmanship of Justice P N Bhagwati, former Chief Justice of India and Member of Human Rights Commission
  • Demo JAM - SAP Summit 2007: 1st prize for best innovation at handling Construction Aids (CONA) material in SAP implementation, etc.

Future Plan:

The company’s real estate subsidiary, HREL, is currently developing a state-of-the-art IT Park at Mumbai as well as free India’s largest Hill City, Lavasa, a three-hour drive away from Mumbai.

Puchho Befikar
SEBI Registered: Investment Adviser - INA000013323
Research Analyst - INH000000719

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