Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hindustan Construction Co Ltd (BOM:500185, Financial) has a diversified order backlog of INR 9,773 crore, with significant contributions from the transport, hydro, and water sectors.
- The company achieved a healthy EBITDA margin of 14.7% for the quarter, an improvement from the previous year's 12.3%.
- Hindustan Construction Co Ltd (BOM:500185) successfully completed several major projects, including the Mumbai Coastal Road project and the BARC Tarapur project.
- The company completed a qualified institutional placement of INR 600 crore, which was well-received by renowned investors.
- Hindustan Construction Co Ltd (BOM:500185) has divested its non-core Steiner business, allowing it to focus on core operations in India and improve liquidity.
Negative Points
- The company reported a standalone net loss of INR 216 crore for the quarter due to exceptional items related to a tax regime change.
- Consolidated revenue decreased to INR 1,006 crore from INR 1,474 crore in the previous year, partly due to divestments.
- The company has a significant net debt of INR 2,900 crore, which it plans to reduce by 15% annually.
- There was a delay in the announcement of bid results, affecting the company's ability to secure new orders.
- Hindustan Construction Co Ltd (BOM:500185) did not receive any material claims or awards in the quarter, impacting turnover.
Q & A Highlights
Q: Can you please let us know what is the net debt in the business as it stands today, and what are the implications on that absolute net debt over the next FY26 and 27?
A: The net debt today stands at around 3,500 crore, which includes almost 1,700 crore of principal. Going forward, we plan to reduce this by about 15% annually as per our repayment plan. We are also exploring avenues to accelerate the repayment process, including repayment through code BG transactions and generating cash from other avenues.
Q: What has been the reason for the decline in standalone revenue this quarter compared to the corresponding quarter last year?
A: This quarter's performance aligns with our budget, considering the completion of several projects like the Anar project, Delhi Metro, and Mumbai Metro coastal roads. With limited availability of work fronts, this is a good outcome. We expect to ramp up turnover with new orders lined up and L1 positions already secured.
Q: Are there any exceptional items expected going forward after the restructuring of the tax structure this quarter?
A: No, going forward, it will be business as usual. The restructuring of our tax structure is complete, and we do not expect any further exceptional items.
Q: Regarding the nuclear power segment, are we seeing any traction or orders coming out?
A: The government had planned for nuclear jobs worth 22,000 to 30,000 crore, but they have not been forthcoming as expected. Only one project, Kaiga, has been awarded recently. However, we are hopeful for good traction in the next 6 to 9 months as planning progresses.
Q: How does the entry of Engineers India into the nuclear power segment affect HCC's positioning in the sector?
A: Engineers India Limited is focusing on design and consultancy, not construction. They are working with government agencies on design, so it does not affect HCC's positioning as a contractor in the nuclear power sector.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
