Claims Settlement and Financial Impact
HCC recently completed a claims settlement worth ₹180 crore with a major client. This settlement reduced client advances by ₹130 crore, which is expected to lower annual financing charges by ₹15 crore. Additionally, ₹50 crore of the settlement will be received as cash consideration, providing a boost to HCC’s liquidity.
Strong Order Book and Bidding Pipeline
As of September 30, 2024, HCC’s order book stood at ₹9,773 crore. The company revealed it has:
- Submitted bids worth ₹3,800 crore, currently under evaluation.
- Developed a robust future bid pipeline of ₹46,000 crore.
Q2 Performance and Key Projects
For Q2 FY2024, HCC reported:
- Standalone turnover: ₹1,203 crore
- Standalone net profit: ₹50.20 crore
- Consolidated revenue: ₹1,407 crore (compared to ₹1,832.60 crore in Q2 FY2023)
- Consolidated profit: ₹64 crore (up from ₹6.40 crore in Q2 FY2023)
Key project milestones during the September quarter include:
- Delhi Metro (DC06 Package): Project completion certificate received.
- Mumbai Coastal Road Project: Southbound arm inaugurated by the Maharashtra Chief Minister.
- Vishnugad Pipalkoti Hydropower Project: Completion of 3.5 km out of 12.1 km of tunnel using TBM, with a peak mining achievement of 509 meters in September 2024.
- Significant progress on projects like Anji Khad Bridge, Mumbai Metro Line 3, and Tehri Pumped Storage Project.
Recent Contracts and Rights Issue
- In October 2024, HCC was awarded a ₹1,031.60 crore contract and emerged as the lowest bidder in projects worth ₹860 crore.
- The company raised ₹350 crore through a rights issue in April 2024.
ICRA’s Outlook and Liquidity Position
ICRA expects HCC to:
- Scale up gross billing from its core EPC business with the inflow of new orders.
- Maintain adequate operating margins.
ICRA highlighted HCC’s strong operational history of over nine decades, its expertise in complex tunneling and hydro projects, and an experienced management team.
To strengthen liquidity, ICRA emphasized the importance of:
- Timely monetization of non-core assets.
- Realization of pending awards.
HCC maintains over ₹200 crore in liquidity and has unutilized arbitration/court bank guarantees (BGs) to address potential funding gaps.
Key Highlights for Investors
- Strong order book and growing bid pipeline.
- Strategic focus on liquidity improvement.
- Proven expertise in large-scale, complex infrastructure projects.
- Positive stock performance despite temporary setbacks.
