HCC Q1 standalone PAT seen down 73% at Rs 7.76 cr

Hindustan Construction Company (HCC) is expected to report a sharp fall of 73% (YoY) in its first quarter FY12 net profit. During the period, standalone profit after tax is likely to go down to Rs 7.76 crore from Rs 28.31 crore in the year ago period.

Total income is seen going up by 13% to Rs 1,127 crore from Rs 995 crore year-on-year.

EBITDA is expected to go up 15% to Rs 144.42 crore versus Rs 125.76 crore in the corresponding quarter last fiscal year.

Operating profit margin is likely to improve to 12.81% versus 12.63% year-on-year.
 
HCC has bagged orders worth Rs 1000 crore (Rs 700 crore order in hydro segment and Rs 300 crore in water segment) in 1QFY12.

Expectations

* Execution in 1QFY12 is expected to be on track.

However the sluggish order inflow in the last few quarters is significantly impacting FY12 earnings outlook

Bottom line to decline significantly due to escalating interest costs and subdued topline growth

Interest cost at the end of Q4FY11 on a standalone basis stood at Rs 90 crore

Debt on the books as of the end of Q4FY11 was Rs Rs 3471 crore; debt/equity ratio was 2.28

Key factors to watch for ---

Ability to improve execution and manage the stretched working capital cycle needs to be watched

Also, capacity to manage interest costs amidst rising interest rates will be the scanner

Lavasa update

In 1QFY12, Lavasa Corporation did not receive any favorable notification from the MoEF and status quo continues

However, the EAC constituted by the MoEF has recommended that company be allowed to restart construction on 1,419 hectares of land

EAC had earlier allowed construction on 681 hectares of land

In total, it has recommended that construction be allowed on 2,000 hectares, which constitutes phase-1 of the Lavasa Project.