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• The company is coming out of woods and on a speedy recovery path.
• Higher spending on infra development augurs well for this infra major.
• It is poised to reap the benefit of infra boom and has fully geared.
• Well-informed investors may park funds for the long term rewards.
ABOUT COMPANY:
Hindustan Construction Co. Ltd. (popularly known as HCC) is an engineering and construction company in India, engaged in construction activities which include roads, bridges, ports, railway tunnels, metro projects, power stations, water supply and irrigation projects, and one of the oldest infrastructure development companies in India (Source: CARE Report). Over the last nine decades, it has transformed from a construction company into a global and diversified infrastructure group. HCC conducts its business operations primarily through three verticals, namely, (i) engineering and construction; (ii) infrastructure development; and (iii) real estate construction, as a single operating segment of engineering and construction. While the engineering and construction business is undertaken directly by the Company, the remaining business verticals are undertaken by its Subsidiaries.
Over the years it has built various projects ranging from high quality roads and railway tunnels in Jammu and Kashmir to nuclear power plants in Rajasthan in addition to various metro stations, hydropower projects, water solutions, buildings, dams and bridges.
It has a robust clientele comprising various Central Government and State Government agencies such as the National Highway Authority of India ("NHAI"), National Hydroelectric Project Corporation ("NHPC"), IRCON International Limited ("IRCON"), Ministry of Road Transport and Highways ("MoRTH"), Tehri Hydro Development Corporation India Limited ("THDCIL"), Nuclear Power Corporation of India Limited ("NPCIL"), Government of Andhra Pradesh (Public Works Department) ("GoAP-PWD") and Delhi Metro Rail Corporation Limited ("DMRC"). As of December 31, 2023, majority of its Order Book comprised projects undertaken with the Central Government, State Government or other government undertakings.
The Company is one of the leading companies in construction and execution of hydro power projects as well as nuclear power generation projects in India.
As of December 31, 2023, it had a total order book of Rs. 11165 cr. on a standalone basis and an order book of Rs. 15532 cr. on a consolidated basis.
In the last five financial years and till the nine months ended December 31, 2023, HCC has completed 14 projects across the engineering and construction and infrastructure development verticals with a cumulative executed value of Rs. 6360.99 cr.
As of December 31, 2023, HCC maintained a fleet of 1,552 major construction equipment (such as 44 hydraulic drilling rigs, hot mix plants, 8 tunnel loading machines amongst others) worth Rs. 183.26 cr.
The company along with NHPC commissioned the Kishanganga hydroelectric project which was inaugurated in 2018 by Hon'ble Prime Minister, Mr. Narendra Modi in Jammu and Kashmir and the Bogibeel rail-cum-road bridge project commissioned between it and the Northeast Frontier Railway in the state of Assam. In the year 2019, the new Aircraft Carrier Dry Dock at the Naval Dockyard, Mumbai, which was constructed by the Company was inaugurated and was the largest dry dock of the Indian Navy measuring a mammoth 281 meters in length, 45 meters in breadth and 17 meters in depth.
The company has built around 4,036 kilometres of roads and over 395 bridges across the country and is also involved in construction of railway and metro rail projects. As of December 31, 2023, its Order Book of the transportation vertical was Rs. 5372 cr.
As of December 31, 2023, it had around 1,137 employees on payroll. Additionally, the company enter into contracts with subcontractors to engage workmen on a contract labour basis from time to time.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 166666666 equity shares of Re. 1 each at a fixed price of Rs. 21 per share to mobilize Rs. 350.00 cr. The RI opens for subscription on March 26, 2024, and will close on April 05, 2024. The company is offering RI in the ratio of 13 for every 118 shares held by the eligible stakeholders as of the record date of March 16, 2024. The full amount it to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 15.70 cr. for the RI, and from the net proceeds, it will utilize Rs. 254.00 cr. for long term working capital, Rs. 16.72 cr. for payment of outstanding dues in terms of the framework agreement, and Rs. 63.58 cr. for general corporate purposes.
The RI is solely lead managed by IDBI Capital Markets & Securities Ltd., while Link Intime India Pvt. Ltd. is the registrar of the issue.
Post-RI, company's current paid-up equity capital of Rs. 151.30 cr. will stand enhanced to Rs. 167.97 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 3527.36 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit/ - (loss) of Rs. 8334.99 cr. / Rs. - (610.02) cr. (FY21), Rs. 10821.86 cr. / Rs. 415.65 cr. (FY22), Rs. 8323.04 cr. / Rs. - (52.51) cr. (FY23).
For 9M-FY24 ended on December 31, 2023, it earned a net profit of Rs. 283.19 cr. on a total income of Rs. 5326.32 cr.
The financial data pages of the offer documents are blurred. While it suffered a setback for FY21, inconsistency seen for the FY22 and FY23. However, it appears that the company is back on track with its first nine months of FY24 performance.
DIVIDEND POLICY:
The company has not declared any dividends since FY12. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 500185 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 35.21 on March 14, 2024, and opened on an ex-right basis at Rs. 34.01 on March 15, 2024. Since then, it has marked a high/low of Rs. 35.90 / Rs. 31.14. The scrip last closed at Rs. 33.00 as of March 21, 2024. For the last 52 weeks' it has posted a high/low of Rs. 46 / Rs. 12.
The promoters' holding has been constant at 18.59% for the last three quarters ended with December 31, 2023. The counter is well managed above the RI price to attract investors.
Review By Dilip Davda on March 21, 2024
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The Hindustan Construction Company Rights Issue 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Hindustan Construction Company Rights Issue 2024 worth investing. The Hindustan Construction Company Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Hindustan Construction Company Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Hindustan Construction Company Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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