Hold HCC; target Rs 19.5: Aditya Birla Money
Aditya Birla Money has recommended hold rating on Hindustan Construction Company (HCC) with a target of Rs 19.5, in its May 07, 2013 research report.
Aditya Birla Money has recommended hold rating on Hindustan Construction Company (HCC) with a target of Rs 19.5, in its May 07, 2013 research report.
"HCC has posted a weak set of results on the top-line as well as operating front. On the profitability front interest costs have been contained mainly due to the debt restructuring programme. The company's focus for FY14 is clearly on lowering its debt and monetizing its assets which we believe is difficult at this stage given the unfavorable market conditions. We expect execution to slowly pick up pace and estimate HCC's top-line to increase by 6.2 percent during FY14 and 9.6 percent in FY15, while we expect its operating margin at 10 percent levels. Given the stretched balance sheet (~4x) interest costs are likely to take a toll on profitability and we expect HCC to continue post losses in FY14 and FY15.""Infrastructure segment is still under severe pressure and we do not foresee the situation improving in the near term. Post, the recent RBI rate cuts interest costs for infrastructure companies are likely to decline marginally. HCC's balance sheet is highly leveraged and with low visibility on asset monetization and high interest cost all are likely to impact HCC's profitability negatively. Lavasa continues to be an overhang on the stock and hence till further clarity emerges we recommend "Hold" rating on the stock with a price target of Rs 19.5. At the CMP, the stock trades at 0.9xFY15E P/B and 11.9x FY15E EV/EBITDA," says Aditya Birla Money research report.Shares held by Central Governments/State GovernmentsDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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