Stock Idea: Hindustan Construction

Hindustan Construction: Buy on dips

Company Overview—

HCC is one of the largest private sector construction companies in India and the foremost in infrastructure building. Businessman and nationalist, Seth Walchand Hirachand, founded the company. With a vision for a modern and prosperous India, Seth Walchand entered into the core sector of industry and on 27th January 1926 Hindustan Construction Company Ltd.,(HCC) was born. Company started initially with tunneling works has today grown to a Company with a dedicated, experienced and expert team of people achieving remarkable feats in the field of civil engineering construction. The Subsidiary Companies of HCC are Hincon Technoconsult Ltd, Western Securities Ltd, HCC Infotech Ltd, Pune Paud Toll Road Company Ltd and Hincon Realty Ltd. The company has staff strength of over 1250 people, including over 600 people with technical and engineering skills and experience. HCC's highly trained manpower and up-to-date machinery are, in large measure, responsible for the quality and excellence of HCC's project implementation. For its immense contribution in the field of construction, HCC has won accolades from several prestigious organizations within India and abroad. Company plans to play a

Products & services—

Company is one of the largest construction and infrastructure building company in the country. HCC specializes in the construction of technologically complex & Long-gestation period projects. The Company executes various projects from diversified areas like Hydel, Power, Roads, Bridges, Dams, Barrages, Marine Works, Buildings & Environmental Projects. The company has also undertaken several projects in Bhutan, Saudi Arabia, Iraq, Myanmar, Tanzania, Sri Lanka etc. The company also specializes in construction techniques like pre-cast units for industrial structures and jetties, slip forming for tall structures and underground shafts, bridge builders for segmented construction of long-span bridges, three-dimensional computer-aided design technology for bridges, and dredgers for speedy sinking of monoliths, etc.

HCC has contributed its civil engineering construction expertise with leading edge technologies for building some of the foremost infrastructure projects in India and abroad. Among these are over 300 road and railway bridges and several outstanding landmarks around the country. HCC has been involved in construction of the most diverse projects ranging from power, dams, highways and bridges, to marine structures, water supply, factories and waste treatment plants

Recent Developments—

10-august, HCC announced that it has bagged an order worth Rs 1.21 billion from Hindalco Industries. The work includes area grading works, water reservoir work and temporary roads & drains for Hindalco’s Aditya Aluminium project at Sambalpur, Orissa. The project is to be completed in 10 calendar months from the date of issue of this order.

9-september, Hindustan Construction Company announced that HCC-CPPL that is Hindustan Construction Co (HCC) and Coastal Projects (P) (CPPL) has been awarded a contract for construction of single line BG Tunnel No. 12 in between Khongsang-Tupul in connection with construction of New Railway Line Project between Jinbham and Tupur in Imphal, from North Front Railway. The value of the contract is Rs 3.128 billion. The company’s share in the total value of the contract is 60% that is Rs 1.876 billion.

24-september, HCC today announced that it has bagged two new contracts worth Rs 6.60 billion from GMR (Badrinath) Hydro Power Generation. The first order i.e. lot 2 involves main civil works package for coffer dams, diversion channel, barrage, power intake, and part HRT. The order is worth Rs 2.73 billion to be completed in 52 months from the date of issue. The second order i.e. lot 3 involves main civil works, package for MAT, powerhouse complex, surge shaft, pressure shaft, pothead yard, TRT and part HRT. The order is worth Rs 3.87 billion to be completed in 54 months from the date of issue.

Valuation—

Order book position of the company is growing steadily from last few quarters. HCC has expertise in hydropower and nuclear power, which will be the key growing areas in future in power sector. At CMP, stock is trading at 24.4 X multiple of its FY2011 Estimated EPS and 14.2 multiple of its FY2012 Estimated EPS. We recommend investors to “BUY” “Hindustan construction company ltd.” at every dips with medium to long-term investment horizon.

Source: Internet (Valuenotes by Abhishek Jain)