Hindustan Construction Company (500185) Q4 03/04 earnings summary

Executive summary

• FY04 income from operations reached a record Rs.1,171.4 crore, up 48.4% YoY; PAT rose 24.5% to Rs.35.7 crore despite margin compression.

• Four new projects worth Rs.1,381 crore were secured; year-end unexecuted work stood at Rs.3,975 crore, up 18% YoY.

• Growth strategy prioritized higher project volumes and equipment utilization, accepting lower average margins amid intense bidding competition.

Financial highlights

• Income from operations was Rs.1,171.4 crore vs. Rs.789.2 crore in FY03; net income excluding integrated JV turnover was Rs.1,058.0 crore vs. Rs.677.2 crore.

• PBDIT excluding other income and integrated JV results rose 21% to Rs.143.3 crore; PAT increased to Rs.35.7 crore from Rs.28.6 crore.

• PBT rose to Rs.60.5 crore from Rs.45.2 crore; EPS was Rs.17.82 vs. Rs.14.31.

• Interest expense declined 10.6% to Rs.37.6 crore from Rs.42.1 crore, despite total debt rising 11.4% to Rs.419.6 crore.

Outlook and guidance

• Unexecuted work at 31 March 2004 was Rs.3,975 crore, 18% above Rs.3,346 crore a year earlier; a Rs.446.99 crore Allahabad Bypass order was secured after year-end.

• Tenders awaited on 17 projects worth Rs.4,743 crore; bids for 16 projects worth Rs.5,605 crore were planned, with prequalification bids submitted for 18 projects worth over Rs.15,264 crore.

• FY05 prospects were considered favorable, with focus on productivity, cost reduction and operational efficiency; steel costs and competitive pricing could continue to pressure margins.