Hind.Construct.

HCC reported a standalone E&C turnover of ₹1,203 crores in Q2 FY25, marking a 5.71% increase from ₹1,138 crores in Q2 FY24. Standalone net profit was ₹50 crore, a slight dip from ₹52 crore YoY, while the EBITDA margin significantly expanded to 18% from 14%. Consolidated revenue, however, decreased by 22.22% YoY to ₹1,400 crores, primarily due to lower contribution from Steiner. Despite this, consolidated profits surged to ₹64 crore from ₹6.4 crore in the previous year, indicating improved operational efficiency.

The company's standalone order book stands strong at ₹9,800 crores as of the quarter end. This is further bolstered by a recent Letter of Award (LOA) for the Agardanda Bridge project worth ₹1,032 crore in October. HCC is also L1 in projects valued at ₹3,860 crores, which are expected to convert in Q3 FY25, with meaningful work commencing 4-5 months post-award. The management is actively working on a substantial pipeline of ₹46,000 crore, targeting new order bookings of around ₹10,000 crores for the full FY25, which will set the stage for future growth.

HCC is making significant strides in debt reduction and de-risking its balance sheet. A key development is the in-principle approval from lenders to reduce the corporate debt guarantee for Prolific Resolution debt from 100% to 20% (on a ₹3,700 crore debt), targeted by end of November. This move is expected to reduce contingent exposure from ₹3,700 crores to ₹600 crores. Additionally, the company anticipates an annual interest reduction of ₹35 crores through the prepayment of ₹307 crores of OCD, bringing the total annual interest cost down from ₹350-370 crores. A Qualified Institutional Placement (QIP) is also planned for completion by December to further strengthen the capital structure.

While HCC's primary focus remains on the E&C business, the company is selectively evaluating BOT (Build-Operate-Transfer) and PPP (Public-Private Partnership) opportunities. Management expressed reluctance to lock up large capital in BOT projects until the company is substantially cash surplus and debt-free. However, they are actively looking at the Pumped Storage Plant (PSP) sector, with a bidding pipeline of ₹12,000-15,000 crores expected in the next 6-8 months. The company is already constructing a 1,000 MW Tehri PSP, giving it an edge in this high-potential sector.

Looking ahead to FY26-27, the transport segment (including railways, metros, and roads) and hydropower are identified as key growth drivers, expected to constitute 40-50% of the business. In the nuclear sector, while it's a heavily controlled segment, annual civil opportunities are estimated at ₹15,000-20,000 crores, with HCC aiming to secure ₹2,000-3,000 crores. The company's diversified project portfolio across various states and sectors positions it well to capitalize on India's infrastructure development push.

The company clarified its accounting for Work-in-Progress (WIP), stating standalone WIP is ₹2,148 crores and consolidated WIP is ₹3,000 crores. Management explained that WIP includes work completed but not yet billed due to contractual milestones or billing cycles. Regarding trade receivables, particularly from Micro Enterprises, which increased from ₹2,400 crores to ₹3,100 crores, management stated this is a normal fluctuation based on project execution and vendor mix, with no direct correlation to profit or revenue growth, and efforts are made to settle these liabilities as early as possible.