No. of equity shares – 256109454
Promoter holding – 47.17 %
General Public holding – 16.94%
Face Value - Re. 1
Market Cap – 3244 Cr
Book Value – Rs. 38.62
Free Reserves per share – Rs. 36.55
Reserves – Rs. 964 Cr
EPS (Rs) – Rs. 4.89
Cash EPS – Rs. 9.39
Bonus – 1:1 (1995)
Price/Book Value – 3.26
52 week high/low – Rs. 128.90/Rs. 28.80
CMP – Rs. 108
Hindustan Construction Company executes the construction of technically complex and high value projects across segments such as Transportation, Power, Marine Projects, Oil and Gas Pipeline Constructions, Irrigation and Water Supply, Utilities and Urban Infrastructure.
HCC is the first construction company in India to be certified for ISO 9001, ISO 14001 and OHSAS 18001 for the Quality.
Since it’s inception in 1926, HCC has completed various “first of its kind in India” projects. It has constructed first nuclear power project in Rajasthan (unit 1 & 2). Recently HCC has created another wonder, Bandra-Worli Sea Link for which it has won prestigious IIBE national award.
Financials:
HCC had registered an impressive performance for the year ended 31st March 2009. The Company’s turnover jumped 13.3% to touch Rs 3518.32 Cr, compared to Rs 3104.34 Cr last year. Its net profit increased by 15% to Rs 125.35 Cr, compared to Rs 108.77 Cr in the previous financial year. The Operating Margins (EBIDTA) grew to 13% from 11.9% in FY 2007-08.
The power sector contributed 51% of the new orders, whereas water solutions and transportation sectors have contributed 31% and 17%, respectively. The Company is awaiting further award of projects worth Rs 1,000 Cr where its bid is lowest (L1). HCC also has bids under evaluation for Rs 10,000 Cr approximately.
For Jun-09, sales were Rs. 876.01 Cr Vs Rs. 865 Cr Y-o-y but Net profits were Rs. 18.19 Cr compared to 30.64 Cr Jun-08.
Its order book position has improved significantly to Rs 16,400 Cr, which is almost 5 times its total income for last year, a YOY growth of 61%.
In the engineering and construction space, HCC won 11 major contracts for more than Rs 9,000 Cr, including the Package MC3 of the prestigious Punatsangchhu HEP (1200 MW) in Bhutan. The infrastructure development business expanded to three projects in FY 08-09, from just one in FY 07- 08. In this year, HCC is preparing to bid for and develop projects in all infrastructure segments, including roads, hydro power, airports, and water solutions and ports development projects.
Creation of great enterprise value:
The interest in this stock is generated due to the following two reasons.
1) HCC holds around 63% stake in Lavasa Corporation through HCC Real Estate. Axis Bank has invested Rs. 250 Cr in Lavasa in the form of convertible preferential shares & debentures, making Lavasa’s valuation at about Rs. 10,000 Cr whereas market-cap of the company is Rs. 3200 Cr only. This shows that the HCC has very high embedded value and when this value is unlocked through an IPO of Lavasa Corporation, HCC will see sharp appreciation in its share price. So, I would recommend accumulating this stock on declines for getting many-fold gains in future. Also Bank of India, Allahabad Bank and Bennett, Coleman and Co. Ltd has made investments in Lavasa.
Overview of Lavasa:
Lavasa is a planned city called as Lavasa Lake City, billed as India's first hill station since Independence, being developed in accordance with the controversial Hill Station policy passed by the Maharashtra government in 2000. The project is being developed primarily by HCC India near Pune and Mumbai and is spread over 12,500 acres, located in the Western Ghats, on the banks of the Baji Pasalkar Reservoir behind the Varasgaon Dam (Varasgaon Dam & Reservoir), in Raigad district, between Pune and Mumbai. The project covers approximately 25,000 acres of land. Lavasa is planned for a permanent population of 2 lakh residents and a tourist inflow envisaged at 20 lakh per annum. Lavasa is planned in four phases out of which, Phase I in Davse will be operational from 2010 with almost 1,000 villas and 500 apartments. The development of Phase II will begin next year and would be ready by 2014. The 3rd and 4th phases would be ready by 2017 and 2021 respectively.
Lavasa sold 1500 residences and concluded lease arrangements for 22,500 sq. ft. retail space to renowned brands. Lavasa has also achieved pre-sales of Rs 800 crore. To date, it has concluded 22 tie-ups with organizations in education, hospitality and healthcare segments. In the hospitality segment, ITC Fortune Dasve, the first hotel at Lavasa, started operations in March 2009. The company also signed a JV agreement with the reputed chain, Hilton ‘Double Tree’, to construct a hotel with 125 rooms. With over 1,000 hotel rooms under development currently, Lavasa is fast emerging as a hospitality hub. The upcoming education facilities at Lavasa are expected to create seats for more than 10,000 students in various disciplines.
Thus Lavasa Corporation has a great future. Thus, Lavasa is a prime offering from HCC, with a level of city infrastructure yet to be experienced in India, thus setting a new benchmark in planning, construction and service delivery.
Most importantly, Lavasa showed impressive financial performance for the year 08-09, included EBT margin of 64% at Rs 135 Cr on an income of Rs 212 Cr and a net profit of Rs 123 Cr. Institutional and residential land sales contributed Rs 143 Cr; build-up space sale of villas, apartments and retail contributed Rs 67 Cr and project management consultancy contributed Rs 2 Cr.
The HCC Real Estate business is also moving ahead at a fast clip. In the 247 Park project at Vikhroli, Mumbai, 50% of the space has been leased and clients have begun work on the interiors.
Promoter holding – 47.17 %
General Public holding – 16.94%
Face Value - Re. 1
Market Cap – 3244 Cr
Book Value – Rs. 38.62
Free Reserves per share – Rs. 36.55
Reserves – Rs. 964 Cr
EPS (Rs) – Rs. 4.89
Cash EPS – Rs. 9.39
Bonus – 1:1 (1995)
Price/Book Value – 3.26
52 week high/low – Rs. 128.90/Rs. 28.80
CMP – Rs. 108
Hindustan Construction Company executes the construction of technically complex and high value projects across segments such as Transportation, Power, Marine Projects, Oil and Gas Pipeline Constructions, Irrigation and Water Supply, Utilities and Urban Infrastructure.
HCC is the first construction company in India to be certified for ISO 9001, ISO 14001 and OHSAS 18001 for the Quality.
Since it’s inception in 1926, HCC has completed various “first of its kind in India” projects. It has constructed first nuclear power project in Rajasthan (unit 1 & 2). Recently HCC has created another wonder, Bandra-Worli Sea Link for which it has won prestigious IIBE national award.
Financials:
HCC had registered an impressive performance for the year ended 31st March 2009. The Company’s turnover jumped 13.3% to touch Rs 3518.32 Cr, compared to Rs 3104.34 Cr last year. Its net profit increased by 15% to Rs 125.35 Cr, compared to Rs 108.77 Cr in the previous financial year. The Operating Margins (EBIDTA) grew to 13% from 11.9% in FY 2007-08.
The power sector contributed 51% of the new orders, whereas water solutions and transportation sectors have contributed 31% and 17%, respectively. The Company is awaiting further award of projects worth Rs 1,000 Cr where its bid is lowest (L1). HCC also has bids under evaluation for Rs 10,000 Cr approximately.
For Jun-09, sales were Rs. 876.01 Cr Vs Rs. 865 Cr Y-o-y but Net profits were Rs. 18.19 Cr compared to 30.64 Cr Jun-08.
Its order book position has improved significantly to Rs 16,400 Cr, which is almost 5 times its total income for last year, a YOY growth of 61%.
In the engineering and construction space, HCC won 11 major contracts for more than Rs 9,000 Cr, including the Package MC3 of the prestigious Punatsangchhu HEP (1200 MW) in Bhutan. The infrastructure development business expanded to three projects in FY 08-09, from just one in FY 07- 08. In this year, HCC is preparing to bid for and develop projects in all infrastructure segments, including roads, hydro power, airports, and water solutions and ports development projects.
Creation of great enterprise value:
The interest in this stock is generated due to the following two reasons.
1) HCC holds around 63% stake in Lavasa Corporation through HCC Real Estate. Axis Bank has invested Rs. 250 Cr in Lavasa in the form of convertible preferential shares & debentures, making Lavasa’s valuation at about Rs. 10,000 Cr whereas market-cap of the company is Rs. 3200 Cr only. This shows that the HCC has very high embedded value and when this value is unlocked through an IPO of Lavasa Corporation, HCC will see sharp appreciation in its share price. So, I would recommend accumulating this stock on declines for getting many-fold gains in future. Also Bank of India, Allahabad Bank and Bennett, Coleman and Co. Ltd has made investments in Lavasa.
Overview of Lavasa:
Lavasa is a planned city called as Lavasa Lake City, billed as India's first hill station since Independence, being developed in accordance with the controversial Hill Station policy passed by the Maharashtra government in 2000. The project is being developed primarily by HCC India near Pune and Mumbai and is spread over 12,500 acres, located in the Western Ghats, on the banks of the Baji Pasalkar Reservoir behind the Varasgaon Dam (Varasgaon Dam & Reservoir), in Raigad district, between Pune and Mumbai. The project covers approximately 25,000 acres of land. Lavasa is planned for a permanent population of 2 lakh residents and a tourist inflow envisaged at 20 lakh per annum. Lavasa is planned in four phases out of which, Phase I in Davse will be operational from 2010 with almost 1,000 villas and 500 apartments. The development of Phase II will begin next year and would be ready by 2014. The 3rd and 4th phases would be ready by 2017 and 2021 respectively.
Lavasa sold 1500 residences and concluded lease arrangements for 22,500 sq. ft. retail space to renowned brands. Lavasa has also achieved pre-sales of Rs 800 crore. To date, it has concluded 22 tie-ups with organizations in education, hospitality and healthcare segments. In the hospitality segment, ITC Fortune Dasve, the first hotel at Lavasa, started operations in March 2009. The company also signed a JV agreement with the reputed chain, Hilton ‘Double Tree’, to construct a hotel with 125 rooms. With over 1,000 hotel rooms under development currently, Lavasa is fast emerging as a hospitality hub. The upcoming education facilities at Lavasa are expected to create seats for more than 10,000 students in various disciplines.
Thus Lavasa Corporation has a great future. Thus, Lavasa is a prime offering from HCC, with a level of city infrastructure yet to be experienced in India, thus setting a new benchmark in planning, construction and service delivery.
Most importantly, Lavasa showed impressive financial performance for the year 08-09, included EBT margin of 64% at Rs 135 Cr on an income of Rs 212 Cr and a net profit of Rs 123 Cr. Institutional and residential land sales contributed Rs 143 Cr; build-up space sale of villas, apartments and retail contributed Rs 67 Cr and project management consultancy contributed Rs 2 Cr.
The HCC Real Estate business is also moving ahead at a fast clip. In the 247 Park project at Vikhroli, Mumbai, 50% of the space has been leased and clients have begun work on the interiors.
Apart from that, HCC has signed two MoUs with Government of Gujarat with a total investment of Rs 41,500 crores. The first MoU has been signed with the Gujarat Infrastructure Development Board to develop a Water Front City with a total investment of Rs.40,000 crores. The new city will be based on Lavasa. The Water Front City will be developed over 4000 acres in Dholera Special Investment Region (SIR) located at the Gulf of Cambay about 129 km from Ahmedabad. Dholera is in the influence area of the Delhi-Mumbai Industrial Corridor (DMIC). The second MOU has been signed with Narmada Water Resources, Water Supply and Kalpasar Department for developing three water pipeline projects worth Rs.1500 crores.
2) Huge investments in power projects is also going to help HCC, & also GOI has plans to foray into Nuclear power projects full-fledged which augurs well for HCC.
HCC specializes in pre-stressed containment structures for reactor buildings.
HCC has been in the forefront of construction of Nuclear Power projects and has built over 50% of India’s nuclear power generation capacity & has built 4 out of India’s 7 operational nuclear power plants. Apart from that it has constructed 18 thermal power projects and 3 gas based power projects. At present the company is executing two nuclear power projects including the Asia’s largest nuclear power plant in Kudankulam (2 X 1000 MW) and unit 5 & 6 of Rajasthan Atomic Power plant.
The management of the company has very good capability & efficiency when it comes to executing the projects. Lavasa faced lots of issues from various wings of society; however that has not deterred the plans of management to execute Lavasa. Lot of projects that have been completed for the 1st time in India after independence, are completed by HCC. Thus they are pioneers of Indian infrastructure industry. The management is very innovative in that they have vision to foresee needs of India which is developing at rapid pace & participate such projects aggressively, one such project is Mumbai’s wonder, 4.7 KM long Bandra-Worli Sea-link.
Considering all these facts, I recommend to buy HCC for a longer term view for multiple gains.
1 comment:
Thank you for your article. For more Lavasa related information visit our website or blog http://blog.lavasa.com/
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