>HINDUSTAN CONSTRUCTION COMPANY LTD (ANAGRAM)

RESULT HIGHLIGHTS

Hindustan Construction reported lower than estimated revenue of Rs 979.7 Cr (-7% yoy) as a few if its projects failed to reach the minimum threshold limit. The (adj) net profit however, was higher 7% partly owing to 300 bps improvement in operating margins to 15.4% for the quarter.

The FX reversal of losses provided earlier in the year and SAP implementation advisory fee has resulted in other income surging to Rs 24 Cr which in turned boosted reported profit by 94.5%. We have treated reversal of FX losses of Rs 19.33 Cras extraordinary item.

HCC booked orders worth Rs 5200 Cr during Q4FY09 taking the total order book to Rs 16400 Cr.

FINANCIALS

Due to change in its accounting policy for treating gains and losses on FX borrowings for working capital, the company has reserved Rs 29 Cr of net FX loss in Q4FY09. The reversed amount has been credited to 'Foreign Currency Monetary Items Translation Difference Account' and will be amortised over 3 years. For Q4FY09, Rs 9.67 has been amortised for the same. We have treated FX loss reversal as a non-recurring item whereas the amortisation of the same has been considered as recurring item.

The revenue growth (YoY) which had been decreasing for last 4 quarters finally slipped below zero - marking de-growth. Apart from the general slow down in execution, the de-growth in revenue was also due to failure of some projects to reach the threshold limit of revenue recognition. The bottom line however, witnessed a 7% rise yoy partly due to higher operating margins at 15.38% (+296 bps yoy)

HCC added orders worth Rs 5002 Cr in the Q4FY09 taking the total unexecuted orders to Rs 16400 Cr. The company is L1 for Rs 1000 Cr worth of projects and is currently evaluating projects worth Rs 10,000 Cr.

To see full report: HCC