Hindustan Construction Company (500185) Q4 05/06 earnings summary

Executive summary

• FY06 operating revenue rose 28.7% to Rs 2,028.2 crore, crossing the Rs 2,000 crore milestone; order backlog grew 80% to Rs 9,672 crore.

• PAT increased 68.6% to Rs 124.8 crore, including a one-time Rs 40 crore pre-tax gain from transferring development rights; EPS rose to Rs 5.44 from Rs 3.70.

• Growth strategy centers on expanding construction scale, improving asset utilization and entering township development through Hincon Realty.

Financial highlights

• Revenue from operations increased 28.7% to Rs 2,028.2 crore from Rs 1,576.5 crore in FY05.

• PBDIT excluding exceptional income and integrated JV profit rose 17.1% to Rs 189 crore from Rs 161.4 crore.

• PBT before exceptional income and integrated JV profit increased 31% to Rs 98.3 crore from Rs 75 crore; reported PBT including exceptional income and JV profit was Rs 138.3 crore.

• Reported PAT rose 68.6% to Rs 124.8 crore from Rs 74 crore; it included Rs 32.8 crore post-tax gain on development-rights transfer.

• Consolidated FY06 net profit was Rs 79.4 crore and annualized EPS was Rs 3.46, versus Rs 71.4 crore and Rs 3.56 in FY05.

Outlook and guidance

• Management expected turnover to continue growing at impressive double-digit rates, supported by a larger backlog, available capital and execution capacity.

• Pending decisions covered five tenders worth over Rs 2,275 crore; bids for 23 projects worth about Rs 12,246 crore were expected, alongside 11 prequalification bids worth over Rs 6,572 crore under evaluation.

• Additional prequalification bids for five projects worth over Rs 5,500 crore were expected; management expressed confidence in securing a sizable share of new work.

• Hincon Realty was exploring development options for Vikhroli land and targeting integrated townships for middle- and upper-middle-income households.