For 3Q FY 2012, HCC’s reported a poor set of numbers with performance at
the revenue and EBITDAM level coming in-line with our and street estimates;
however, earnings plunged on account of provisions (expected future losses
and cost revisions) worth Rs.166 Crore by the company.
We believe these provisions are not exceptional in nature and pertain to the normal course of business.
On the top-line front, HCC’s revenue declined by 5.6% y o y to Rs.946.0 Crore (Rs.1,003 Crore) against our estimate of Rs.982.0 Crore due to slowdown in order inflow
and execution bottlenecks. EBITDAM came in at 11.7% (12.6%), a dip of
0.90% y o y and marginally lower than our estimate of 11.9%. On the earnings
front, HCC reported a loss of Rs.130.4 Crore vs. profit of Rs.7.9 Crore in 3Q FY 2011,
against our estimate of loss of Rs.25.5 Crore owing to a decline in revenue,
EBITDA margin and provisioning of Rs.166 Crore. Interest cost came at Rs.104.3 Crore, a
decline of 39.4%/2.9% on a y o y/q o q basis.
Owing to concerns such as Slow down in order inflow, high debt and stretched working capital, we remain
Neutral on the stock.
Share Review by Angel Broking
the revenue and EBITDAM level coming in-line with our and street estimates;
however, earnings plunged on account of provisions (expected future losses
and cost revisions) worth Rs.166 Crore by the company.
We believe these provisions are not exceptional in nature and pertain to the normal course of business.
On the top-line front, HCC’s revenue declined by 5.6% y o y to Rs.946.0 Crore (Rs.1,003 Crore) against our estimate of Rs.982.0 Crore due to slowdown in order inflow
and execution bottlenecks. EBITDAM came in at 11.7% (12.6%), a dip of
0.90% y o y and marginally lower than our estimate of 11.9%. On the earnings
front, HCC reported a loss of Rs.130.4 Crore vs. profit of Rs.7.9 Crore in 3Q FY 2011,
against our estimate of loss of Rs.25.5 Crore owing to a decline in revenue,
EBITDA margin and provisioning of Rs.166 Crore. Interest cost came at Rs.104.3 Crore, a
decline of 39.4%/2.9% on a y o y/q o q basis.
Owing to concerns such as Slow down in order inflow, high debt and stretched working capital, we remain
Neutral on the stock.
Share Review by Angel Broking
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