Analysts expect HCC to post loss of Rs 44 cr in Q1

The loss during the quarter is on account of escalating interest cost and muted execution. Interest cost is expected increase by around 60% year-on-year.

Total income is seen going down by 4% to Rs 1,018 crore and earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to decline by 19% to Rs 112 crore during the same period.

Analysts expect revenues declining due to slowdown in execution on account of macro headwinds. Despite a strong order-book, the execution would be muted due to increased working capital requirement, say analysts.

Trend of muted margin performance, which has been seen in last few quarters, is expected to continue in the June quarter as well.

EBITDA margin is seen falling by 200 basis points to 11% from 13% year-on-year.

For the company, analysts are worried about slowdown in execution due to various project specific/other regulatory issues. Working capital cycle, which is already at an elevated level, will be another cause of concern.

Order Inflow

They expect order inflow to remain weak as order book at the end of March quarter stood at Rs 15,336 crore as against Rs 16,187 crore in a year ago period and Rs 16,240 crore in the December quarter of FY12, which is an indication of decline trend in order inflow.

Capex Plans

HCC intends to go for a capex of Rs 800 crore in current financial year 2012-13, which would be funded by banks. Banks have agreed to lend additional funds worth Rs 600 crore to the company.

Other news flow related to HCC during the quarter

Reports suggested that the RBI has refused to accord infrastructure status to Lavasa’s (wherein HCC holds 65% stake) corporate loans. This meant that HCC would be unlikely to enter the special cell set up by banks to help ease the debt burden of troubled companies with high-cost borrowings.

Company had already sought shareholders’ approval to raise Rs 1,500 crore via issue of securities.
 
Investors should watch out for implementation of corporate debt restructuring (CDR) package, company’s recovery plan and development details on Lavasa.