Detailed Narrative
Q3 FY25 Financial Performance Overview
Hind.Construct. reported a stand-alone turnover of ₹1,002 crores in Q3 FY25, a 19.45% decline from ₹1,244 crores in Q3 FY24. Despite this, the stand-alone EBITDA margin improved to 14.7% from 12.3% YoY. The company posted a stand-alone net loss of ₹216 crores, primarily due to a one-time📎 exceptional item📎 related to the adoption of a new tax regime, which involved reversing ₹147 crores of deferred tax assets and writing off ₹154 crores of MAT credits. Consolidated revenue also saw a significant decline of 31.75% YoY to ₹1,006 crores, largely attributed to the divestment of Steiner AG, resulting in a consolidated net loss of ₹38.9 crores.
Order Book & Business Development Pipeline
As of December 31, 2024, HCC's audit backlog stands at ₹9,773 crores, with Transport (47%), Hydro (26%), and Water (22%) sectors dominating. The company also holds L1 positions worth ₹3,513 crores, which are expected to convert into orders soon. During the quarter, an LOA for the Agaranda Creek Bridge worth ₹1,032 crores was received. HCC has submitted bids for projects totaling ₹17,679 crores and is actively working on a robust bidding pipeline of approximately ₹36,000 crores for upcoming quarters, indicating strong future order inflow potential.
Impact of New Tax Regime & Steiner Divestment
The adoption of the new tax regime led to a stand-alone net loss of ₹216 crores in Q3 FY25 due to the reversal of deferred tax assets and write-off of MAT credits. However, excluding this exceptional item📎, PBT was ₹18 crores. The divestment of Steiner AG, HCC's Swiss real estate entity, was completed to focus on core Indian operations. This divestment impacted consolidated revenue, which declined by 31.75% YoY. HCC has retained claims and receivables worth almost ₹1,000 crores from Steiner, expected to be realized over the next 5-6 years, along with an earn-out of up to ₹200 crores over 2-3 years, and ownership of Steiner India's land assets worth ₹43 crores.
Debt Position and Deleveraging Strategy
The company's gross debt stands at ₹3,500 crores, with cash of ₹600 crores, leading to a net debt of ₹2,900 crores. Management aims to reduce net debt by almost 15% annually, with plans to accelerate repayments through various avenues, including potential cash generation and arbitration awards. The recently completed Qualified Institutional Placement (QIP) of ₹600 crores, which was well-subscribed, further strengthens the company's liquidity and deleveraging efforts.
Operational Progress & Project Milestones
HCC reported significant operational progress across its projects. The Anji Khad project received its completion certificate, and the northbound arm of the Mumbai Coastal Road project was inaugurated and is fully functional. Structure works for BARC Tarapur are complete, with handing over in progress. Unit 5 synchronization for the Tehri Pumped Storage Scheme is done, and 4.8 km of TBM mining has been achieved out of 12.1 km in the Vishnughad Pipalkoti HEP. Finishing works are underway for almost every station of the Mumbai Metro project, with trial runs expected to commence by March.
Future Growth Outlook & Sectoral Opportunities
Management expects FY25 turnover to be flattish, with some softness in the top line over the next 2-3 quarters due to the lag between new order wins and revenue recognition (approximately six months). However, they project FY26 to be better than FY25, and FY27 better than FY26, driven by the conversion of the strong order pipeline. The order backlog composition is expected to remain dominated by Transport (50-60%) and Hydro (around 30%, increasing). While nuclear sector orders have been slow, management anticipates good traction within 6-12 months. Resolution of Steiner India's land assets, including those in Lavasa, is also expected within the next 1.5 years.