Analysts' Picks: Hindustan Construction
RELIGARE retain its 'buy' rating on HCC with a target price of Rs 230. The company's net sales increased by 18.8% y-o-y in Q1 FY09.
HINDUSTAN CONSTRUCTION
RESEARCH: RELIGARE
RATING : BUY
CMP: RS 91
RELIGARE retain its 'buy' rating on HCC with a target price of Rs 230. The company's net sales increased by 18.8% y-o-y in Q1 FY09. About 37% of its revenue came from the power segment, 36% from the transport segment, 25% from the water segment and 2% from other segments.
EBITDA increased by 15.6% y-o-y. HCC's interest cost increased by 21% y-o-y, while depreciation rose by 11% y-o-y. Interest cost increased due to higher working capital requirements, capex and investments in real estate. Adjusted PAT rose by 37% y-o-y, mainly due to higher other income and lower tax rate.
The company reported forex losses worth Rs 50.6 crore on account of overseas borrowings and a gain of Rs 61.9 crore from the transfer of land to its group company. At its CMP, the stock trades at a P/E of 24x FY09E diluted earnings.
Religare is revising its target price downwards to Rs 230 from Rs 280, due to a downward revision in the valuation of Lavasa because of higher discounting rates.
It had earlier valued Lavasa based on the discounted rate of 13%, which has now increased to 14.5%. The company is in advanced stages of finalising a stake sale of 5-10% in Lavasa to PE investors. This will set the benchmark for valuing Lavasa, which is the key trigger for the stock.
RESEARCH: RELIGARE
RATING : BUY
CMP: RS 91
RELIGARE retain its 'buy' rating on HCC with a target price of Rs 230. The company's net sales increased by 18.8% y-o-y in Q1 FY09. About 37% of its revenue came from the power segment, 36% from the transport segment, 25% from the water segment and 2% from other segments.
EBITDA increased by 15.6% y-o-y. HCC's interest cost increased by 21% y-o-y, while depreciation rose by 11% y-o-y. Interest cost increased due to higher working capital requirements, capex and investments in real estate. Adjusted PAT rose by 37% y-o-y, mainly due to higher other income and lower tax rate.
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The company reported forex losses worth Rs 50.6 crore on account of overseas borrowings and a gain of Rs 61.9 crore from the transfer of land to its group company. At its CMP, the stock trades at a P/E of 24x FY09E diluted earnings.
Religare is revising its target price downwards to Rs 230 from Rs 280, due to a downward revision in the valuation of Lavasa because of higher discounting rates.
It had earlier valued Lavasa based on the discounted rate of 13%, which has now increased to 14.5%. The company is in advanced stages of finalising a stake sale of 5-10% in Lavasa to PE investors. This will set the benchmark for valuing Lavasa, which is the key trigger for the stock.
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