Hindustan Construction Company Financial Analysis 2010-2014

8/10/2019 Hindustan Construction Company Financial Analysis 2010-2014

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HINDUSTAN

CONSTRUCTI

ON

COMPANYA FINANCIALANALYSIS U113045

U113046

U113052

U113054

U113117

U113019

GRO

PWC FINAL PRESENTATION


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COMPANY OVERVIEW

1. HCC Ltd. executes large-scale civil engineering and infrastructure projects

such as hydel power plants, nuclear power plants, expressways and

highways, tunnels and bridges.

2. HCC currently serves the infrastructure sectors of transportation, power and

water.

3. HCC was the first construction company in India to be certified for ISO 9001,

ISO 14001 and OHSAS 18001 for its quality, environmental and occupational

health and safety management systems.

HCC's businesses span the sectors of Engineering & Construction, Real Estate, Infrastructure, Urba

Management.

The HCC group of companies comprises HCC Ltd., and its subsidiaries:

HCC Real Estate Ltd

HCC Infrastructure Co. Ltd

Lavasa Corporation Ltd

Steiner AG in Switzerland

Highbar Technologies Ltd.


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INFRASTRUCTURE SECTOR TRENDS

0

50

100

150

200

Spending (US

167

659

FY 08

Electricty Railways

One of the worlds fastest growing economies and growth expected to

continue at 7-7.5% despite the global downturn

Public private partnerships (PPPs) are gaining in importance, and are benefiting

from government supporttargeted PPP participation is US$150 billion.

Few restrictions on foreign direct investment (FDI) for infrastructure projects

Tax holidays for developers of most types of infrastructure projects, some of

which are of limited duration

FDIRoutes

Approval Route

Permission require

Automatic Route

Freely permissibl(100%)

Hurdles1. Major infrastructure projects are governed by the concession agreements

signed between public authorities and private entities. Tariff

determination and the setting of performance standards vary somewhat

by sector.

2. As is the case in many countries, there is no single regulator which

formulates the policy for all infrastructure projects.

3. There is also no standardisation in the concession agreements across the

different infrastructure sectors.


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REAL ESTATE

Real estate contributed about 6.3 per cent to India's

gross domestic product (GDP) in 2013.

The market size of the sector is expected to increase at

a compound annual growth rate (CAGR) of 11.2 per

cent during FY 2008-2020 to touch US$ 180 billion by

2020.

TRENDS

1. Demand for Residential space to grow sharply

2. Metros driving Demand for Commercial Space

3. Retail Space likely to see strong growth

4. Hospitality market to witness large incremental

capacity

PORTERS 5 FORCES


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CapitalExpenditureFixed assets increased from2010 till 2012 due purchases

After 2012 the fixed assetshave been decreasing due

depreciation and with nosignificant CapEx

Capital Work-In-Progresshas been in the decreasingtrend over the past 5 years

1650

1700

1750

1800

1850

1900

1950

2000

2050

2100

2010 2011 2012 2013 2014

Gross Block

Gross

0

5

10

15

20

25

30

35

40

2010 2011 2012 2013 2014

Capital WIP

Capita


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Return from assets have decreased over the past 5 yearsand more or less stabilized around 20%

0

10

20

30

40

50

60

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

Return on Assets Excluding Revaluations

Return on Assets Excluding

Revaluations


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Liquidity and SolvencyRatios

The current ratio has declined slightly over the 5 years, but the Quick ratio hasincreased, suggesting high cash and cash equivalents, leading to high liquidity.

However the Debt-equity ratio has increased using high leverage and weakerequity position

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5


Current RatioQuick Ratio

Debt Equity Ratio


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Interest cover have decreased over the years, but increasedlast year suggesting lower debt interest burden

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8


Interest Cover

Interest Cover


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The productivity of HCC has declined for three years, but last year it picked up again. This suggest significant utilization of fixed assets.

1.75

1.8

1.85

1.9

1.95

2

2.05

2.1


Fixed Assets Turnover Ratio

Fixed Assets Turnover Ratio


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The ROCE have increased over the past 5 years suggesting higher profitabilifrom the available capital pool

0

2

4

6

8

10

12

14


Return On Capital Employed(%)

Return On Capital

Employed(%)


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Earning per share has also been declining between 2010-12, but haveincreased in the last 2 years showing a positive value

-4

-3

-2

-1

0

1

2

3

4


Earnings Per Share

Earnings Per Share


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Recent Competitive Advantage

Sebi approval for Lavase IPO

HCC awarded Rs 278 Crore PWD New Delhi contract

Rs 634.79 crore, Transportation and Hydel Power segment projects


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FINANCIAL RATIOA COMPARISON FROM 2010 - 2014


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PROFITABILITY


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PROFITABILITY


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PROFITABILITY


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LIQUIDITY


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LEVERAGE


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COMPETITOR PERFORMANCE

Profit & Loss account -- in Rs. Cr. --

HCC Mar '10 Mar '11 Mar '12 Mar '13 Mar '14 CAGR

Income

Sales Turnover 3,629.21

4,095.7

5

3,996.0

8

3,832.2

9

4,042.5

2 2%

Total Income 3,646.97

4,134.7

7

3,929.9

0

3,967.7

8

4,256.1

1 3%

Expenditure

Raw Materials 0 0 0 79.6 72.08

Employee Cost 394.35 467.64 439.24 402.03 388.46 0%

Other Manufacturing

Expenses

2,631.1

8

2,875.1

5

2,937.8

1

2,870.1

8

2,819.3

0 1%

Miscellaneous Expenses 19.37 37.71 46.88 116.48 132.77 47%

Total Expenses

3,171.0

8

3,548.8

2

3,543.2

1

3,468.2

9

3,412.6

1 1%

Operating Profit 458.13 541.85 445.02 364 629.91 7%

PBDIT 475.89 585.95 386.69 499.49 843.5 12%

Interest 240.15 327.47 543.16 529.67 607.94 20%

Profit Before Tax 121.84 105.79 -318.57 -193.58 90.95 -6%

Reported Net Profit 81.44 71 -222.25 -137.64 80.64 0%

Profit & Loss account -- in

UNITECH Mar '10 Mar '11 M

Income

Sales Turnover 1,849.49

1,340.4

1

1,

Total Income 2,214.55

2,171.4

2

1,

Expenditure

Raw Materials 53.71 7.97

Employee Cost 93.18 115.41 1

Other Manufacturing

Expenses 920.51 884.14 8

Miscellaneous Expenses 24.68 50.26 7

Total Expenses

1,146.2

5

1,107.3

6

1,

Operating Profit 698.5 237.1 2

PBDIT

1,068.3

0

1,064.0

6 74

Interest 346.7 329.21 2

Profit Before Tax 715.65 728.17 4

Reported Net Profit 544.3 510.08 3


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Mar-10 Mar-11 Mar-12 Mar-13 Mar

Debtors Conversion Period 22.85 12.62 31.33 29.32 25.

Days of Inventory 471.2 383.33 314.55 264.88 222

Days Accounts Payable 228.1 141.8 99.94 84.42 80.

Net Operating Cycle 265.95 254.12 245.94 209.78 168

CASH CONVERSION CYCLE

The companys order book is geared towards hydel projects that are typi

gestation.

HCC has ventured into real estate and BOT segments, both of which enta

investments with returns generally taking a long time to materialize.


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THE ENDTHANK YOU FOR YOUR TIME

Hindustan Construction Company Financial Analysis 2010-2014

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