HCC shares tank 4% on claims settlement; key details

Shares of Hindustan Construction Company Ltd (HCC) tumbled 4 per cent in Tuesday's trade after the company completed a claims settlement with a major client for Rs 180 crore. This has resulted in the reduction of client advances amounting to around Rs 130 crore. The balance Rs 50 crore is being received as cash consideration, HCC informed stock exchanges. 

HCC shares fell 4.2 per cent to hit a low of Rs 39.21 on BSE. The stock is still up 40.86 per cent in 2024 so far. 

"The company has completed a claims settlement with a major client for Rs 180 crore, resulting in the reduction of client advances amounting to around Rs 130 crore (implying a reduction of annual financing charges of Rs 15 crore), with the balance Rs 50 crore being received as cash consideration, thereby boosting liquidity," HCC said. 

The company’s order book stood at Rs 9,773 crore as of September 30, 2024. Post its Q2 results in October, HCC said it has submitted bids worth Rs 3,800 crore which are under evaluation while work is well underway on a future bid pipeline of Rs 46,000 crore. 

ICRA expects HCC to ramp-up its gross billing from the core EPC business with inflow of new orders, while maintaining adequate operating margins. ICRA has factored in the likely support to the liquidity profile from the fund infusion. 

HCC’s long track record of operations of over nine decades, supported by an experienced management and demonstrated capabilities in executing relatively complex tunnelling and hydro projects, ICRA said.

For the quarter HCC had reported a standalone turnover and net profit of Rs 1,203 crore and Rs 50.20 crore, respectively. 

HCC was awarded a Rs 1,031.60 crore contract in October and was the lowest bidder in projects worth Rs ,860 crore. The company reported consolidated revenue of Rs 1,407 crore in Q2 against Rs 1,832.60 crore in Q2FY24. The consolidated profit was at Rs 64 crore in Q2 against Rs 6.40 crore in Q2FY24.

In the September quarter, HCC received its project taking over certificate for Delhi Metro’s DC06 package and the south bound arm of the Mumbai Coastal Road Project was inaugurated by the Chief Minister of Maharashtra. The Vishnugad Pipalkoti hydropower project saw completion of 3.5 km tunnel out of 12.1 km using TBM, with a peak TBM mining of 509 m achieved in September 2024. 

"Significant progress has been achieved on the Anji Khad Bridge, Mumbai Metro Line 3 and Tehri Pumped Storage projects," HCC said post its Q2 results. HCC raised Rs 350 crore through rights issue in April 2024. 

"Timely realisation of these funds remains critical for debt repayments in March 2025. Going forward, timely monetisation of non-core assets and realisation of awards remains crucial to materially improve its liquidity position. In absence of sanctioned fund-based working capital lines, the company is maintaining over Rs 200 crore of liquidity on a sustained basis. ICRA draws comfort from the cushion available in the form of unutilised arbitration/court BGs that could be used to realise some of the awards pending in the higher courts, in case of funding shortfall," ICRA said.