CRISIL maintains fundamental grade of 2/5 to C&C Const
CRISIL Research has come out with its report on C&C Constructions. The research firm has maintained the fundamental grade of 2/5 to the company in its May 16, 2012 report.
CRISIL Research has come out with its report on C&C Constructions. The research firm has maintained the fundamental grade of 2/5 to the company in its May 16, 2012 report.
C&C Constructions Ltd’s (C&C’s) Q3FY12 (June year-ending) consolidated results were significantly below CRISIL Research’s expectations. Revenues declined 7% y-o-y due to delays in some of the ongoing projects, which are either moving slowly or are stuck due to clearance issues. The company has reported losses at the operating level as it was unable to meet fixed costs. We believe working capital has stretched further, resulting in higher debt and interest cost. This has resulted in a substantial net loss of Rs 560 mn in Q3FY12. C&C did not receive any new orders this quarter; its current order book is ~Rs 48 bn (3.5x TTM revenues). We maintain our fundamental grade of 2/5. We will revise our estimates downwards post interaction with the management.Q3FY12 (June-ending) result analysis – consolidated
• Revenue declined 7% y-o-y (~31% q-o-q) to Rs 2.4 bn due to delays in few projects which, we believe, are moving slowly or are stuck due to clearance issues. We believe working capital of the company has been stretched further during the quarter. This coupled with higher gearing led to a cash crunch. As a result, the company faced difficulties in putting the requisite cash for execution of the on-going projects. We will provide more clarity on the slow-moving projects post discussion with the management.• The company reported EBITDA loss of Rs 46 mn in Q3FY12. This is significantly below EBITDA of Rs 571 mn in Q3FY11 and Rs 527 mn in Q2FY12. Post our interaction with the management we will get more clarity on the reason for EBITDA loss during the quarter.• Increase in working capital requirements led to an increase in debt and interest costs. This along with the losses at the EBITDA level led to a net loss of Rs 560 mn in Q3FY12. The company also reported a net loss of Rs 48 mn in Q2FY12.Valuations: Current market price has strong upside
We continue to value C&C based on the sum-of-the-parts method. Our fair value is Rs 144 per share. We will revise it downwards post interaction with the management. At the CMP of Rs 67, our valuation grade is 5/5.To read the full report click on the attachmentDisclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report. The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.© CRISIL Limited . All Rights Reserved. Published under permission from CRISIL"
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