Exit HCC on any upside: SP Tulsian

Tulsian told CNBC-TV18, “The negative view on Hindustan Construction is likely to continue because the performance for the company for Q4 on a standalone basis there has been Rs 75 crore of net loss. We should not see Rs 54 crore as the net loss of the company for that quarter because Rs 21 crore deferred credit which has been booked by the company as income is just a book entry and in fact the correct loss is at Rs 75 crore. Similarly if you see on a consolidated basis for the whole of HCC the loss it at Rs 750 crore, and not Rs 550 crore as seen. Generally we see the bottomline figure after the deferred tax credit, which his just a book entry and non-cash item.”

“Apart from that if you see the concerns on the company continues to remain. Reduction in the Rs 15,000 crore order inflow is not good. Apart from that overall, the problem with the company is that this is not only Lavasa which matters for the company because if the standalone can give a loss of Rs 75 crore on Q4, and identical if you just multiply that by four, the net loss for the whole of FY12 is at Rs 310-315 crore. So rising debt of close to about Rs 4200-4300 crore, and I am not even including the trade payable, the creditors etc, on a consolidated basis Rs 8000 crore.”

“One wonders how the company can be able to reduce the debts even though their CDR has been admitted but it is pending for approval. But sometimes you wonder even by taking a moratorium of 24months, how the company can give a definite plan of repayment to bankers etc because they haven’t received the approval for Lavasa phase II. In fact the response on Lavasa has been very lukewarm. So taking all this under consideration, I think the gloomy situation continues to remain on HCC for quite some time. I won’t be too comfortable taking a call. Sometimes we may see the upside happening in the stock price, maybe in line with other infra stocks etc but that should only be used as an exit opportunity and not for taking any investment call even the short-term investment call. So this is definitely a big miss.”