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Hindustan Construction Co EBITDA jumped on 46.0% in 2015 and Revenue increased on 7.1%

30-04-2015 • About Hindustan Construction Co ($HCC) • By InTwits

Hindustan Construction Co reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • EBITDA Margin is expanding: 12.0% in FY2015 vs. 8.8% in FY2014 vs. 8.7% in FY2011
  • EBITDA Margin is quite volatile: 12.0% in FY2015, 8.8% in FY2014, 5.3% in FY2013, 5.3% in FY2012, 8.7% in FY2011
  • Hindustan Construction Co has high CAPEX intensity: 5 year average CAPEX/Revenue was 13.9%. At the same time it's in pair with industry average of 12.2%.
  • CAPEX is quite volatile: 34,936 in FY2015, 43,361 in FY2014, 42,702 in FY2013, 53,507 in FY2012, 92,321 in FY2011
  • The company has business model with low profitability: ROIC is at 7.4%
  • It operates with high leverage: Net Debt/EBITDA is 9.3x while industry average is 5.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Hindustan Construction Co ($HCC) key annual financial indicators

mln. INR201120122013201420152015/2014
P&L
Revenue71,55981,57685,10096,683103,5307.1%
EBITDA6,2304,3434,5338,52412,44446.0%
Net Income-646-5,301-4,825-2,774-1,595
Balance Sheet
Cash6,0145,7897,6716,8693,606-47.5%
Short Term Debt17,48935,99920,58729,27136,43924.5%
Long Term Debt50,65651,63879,10082,22982,3620.2%
Cash flow
Capex15,67310,39510,54112,8539,475-26.3%
Ratios
Revenue growth80.0%14.0%4.3%13.6%7.1%
EBITDA growth10.2%-30.3%4.4%88.0%46.0%
EBITDA Margin8.7%5.3%5.3%8.8%12.0%3.2%
Net Income Margin-0.9%-6.5%-5.7%-2.9%-1.5%1.3%
CAPEX, % of revenue21.9%12.7%12.4%13.3%9.2%-4.1%
ROIC5.2%1.9%1.3%4.8%7.4%2.7%
ROE-5.2%-54.2%-75.6%-51.8%-29.0%22.7%
Net Debt/EBITDA10.0x18.8x20.3x12.3x9.3x-3.0x

Revenue and profitability


The company's Revenue increased on 7.1% in FY2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 3.2 pp from 8.8% to 12.0% in FY2015.

Net Income marign increased slightly on 1.3 pp from -2.9% to -1.5% in FY2015.

Capital expenditures (CAPEX) and working capital investments


In FY2015 Hindustan Construction Co had CAPEX/Revenue of 9.2%. The company's CAPEX/Revenue decreased on 3.6 pp from 12.7% in FY2012 to 9.2% in FY2015. For the last three years the average CAPEX/Revenue was 11.6%.Hindustan Construction Co invested a large share of EBITDA (76.1%) to CAPEX.

Return on investment


The company operates at low but positive ROIC (7.43%) and negative ROE (-29.03%). ROIC increased on 2.7 pp from 4.8% to 7.4% in FY2015. ROE jumped on 22.7 pp from -51.8% to -29.0% in FY2015.

Leverage (Debt)


Debt level is 9.3x Net Debt / EBITDA and 9.5x Debt / EBITDA. Net Debt / EBITDA dropped on 3.0x from 12.3x to 9.3x in FY2015. Debt increased on 6.5% in FY2015 while cash dropped on 47.5% in FY2015.

Appendix 1: Peers in Construction & Engineering


Below we provide Hindustan Construction Co benchmarking against other companies in Construction & Engineering industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Madhucon Projects ($MADHUCON)-72.3%-19.5%61.7%81.2%
C & C Constructions ($CANDC)7.1%-11.6%-12.2%31.7%
Mbl Infrastructures ($MBLINFRA)-58.2%26.3%7.1%30.3%
Atlanta ($ATLANTA)-61.5%-47.6%115.1%28.1%
Arss Infrastructure Projects ($ARSSINFRA)59.0%-5.3%-34.8%17.8%
 
Median (31 companies)-17.2%8.7%6.9%6.6%18.8%
Hindustan Construction Co ($HCC)14.0%4.3%13.6%7.1%


Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Jaiprakash Associates ($JPASSOCIAT)44.0%36.9%35.9%32.4%
Atlanta ($ATLANTA)44.1%28.5%34.6%30.8%
Shristi Infrastructure Development Corporation ($SHRISTI)28.0%27.2%30.0%30.0%
Madhucon Projects ($MADHUCON)11.6%8.4%31.9%22.1%
Arss Infrastructure Projects ($ARSSINFRA)21.8%14.0%13.9%22.0%
 
Median (29 companies)12.4%12.4%11.3%10.7%10.4%
Hindustan Construction Co ($HCC)8.7%5.3%5.3%8.8%12.0%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Madhucon Projects ($MADHUCON)149.8%234.5%155.1%76.0%
Jaiprakash Associates ($JPASSOCIAT)114.7%97.0%65.5%45.0%
Supreme Infrastructure India ($SUPREMEINF)16.7%46.6%31.1%43.1%
Man Infraconstruction ($MANINFRA)11.5%7.8%1.6%25.0%
Jmc Projects (India) ($JMCPROJECT)7.8%4.5%1.7%18.9%
 
Median (23 companies)5.5%7.3%6.6%4.0%0.3%
Hindustan Construction Co ($HCC)21.9%12.7%12.4%13.3%9.2%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Skipper ($SKIPPER)10.6%10.4%13.5%14.7%
Mbl Infrastructures ($MBLINFRA)24.3%21.3%13.4%14.0%
Voltas ($VOLTAS)32.9%19.6%11.7%11.8%
Supreme Infrastructure India ($SUPREMEINF)15.0%15.4%12.4%10.6%
Reliance Industrial Infrastructure ($RIIL)5.1%10.8%12.7%10.5%5.7%
 
Median (42 companies)10.7%8.6%7.5%6.3%6.6%
Hindustan Construction Co ($HCC)5.2%1.9%1.3%4.8%7.4%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Coromandel Engineering Company ($COROENGG)7.1x14.4x54.6x3.2x
Welspun Projects ($WELPROJ)71.3x6.0x2.6x20.8x
Punj Lloyd ($PUNJLLOYD)6.5x6.7x6.8x16.5x
Madhucon Projects ($MADHUCON)40.1x96.8x19.0x16.4x
Jaiprakash Associates ($JPASSOCIAT)7.6x9.2x8.9x11.0x
 
Median (32 companies)3.7x4.5x5.3x5.9x3.0x
Hindustan Construction Co ($HCC)10.0x18.8x20.3x12.3x9.3x


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