HCC Misses The Mark In Q2, But Says Rest Of The Year Will Be Better
HCC CFO says he hopes to reduce its debt by half by the end of this financial year.
Despite a 42.6 percent drop in its July to September quarter profit, Hindustan Construction Company Ltd. is optimistic about improving its order book and halving its debt by the end of the financial year.
Net profit dropped to Rs 28.1 crore in the July to September quarter from Rs 40.4 crore in the same quarter last year, according to the company’s stock exchange filing. The consensus estimate of analysts tracked by Bloomberg pegged net profit at Rs 18.63 crore.
Revenue of the construction company fell 5.6 percent, missing estimates by 26.6 percent. Net sales stood at Rs 911.1 crore compared to Rs 961. 8 crore last year, the filing added. Other income for the quarter stood at Rs 60 crore.
This decline mainly due to the heavy monsoon as well as the disruptions in Jammu and Kashmir where some large projects are currently getting executed, chief financial officer, Praveen Sood said in the press release.
HCC’s robust order book across key sectors, along with sustained efforts to improve operational efficiencies and cost rationalisations has given us a competitive edge to withstand the challenging economic environment. With improved business sentiment and order booking, we expect to enhance turnover in the coming quarters.Praveen Sood, Group CFO, HCC
Order Book Improvement
HCC’s order book has jumped nearly 50 percent so far in 2016, with orders worth Rs 4,000 crore being added in the last quarter alone, Sood told BloombergQuint. The total order book now stands at Rs 21,000 crore.
Amongst the new projects bagged by the construction major, is an order from the Mumbai Metro Rail Corporation Ltd. (MMRC) to build a section of the Metro 3 project.
HCC has started collecting over Rs 30 lakh from the Farakka-Raiganj Highway in West Bengal, where the company recently started collecting tolls, Sood added.
HCC welcomed the Cabinet Committee of Economic Affairs’ decision to release at least 75 percent of the amount, in cases where arbitral awards have been given but have been contested.
Sood says the company is hoping to reduce its debt by half by the end of the financial year 2015-16, once the government releases the 75 percent of the total awards won at arbitrations, which works out to a little more than Rs 2,500 crore and will go a long way in reducing the Rs 5,000 crore debt that HCC has on its books right now.
