Elara Capital Buy Call On HCC says Company Poised to reclaim past glory improves financial health

Hindustan Construction Company: Shares of infrastructure giant Hindustan Construction Company are witnessing a strong rally in the trading session of Tuesday, June 11, 2024. The company's stock is trading with a jump of 18.44 percent. The reason for this rise is the report of brokerage firm Elara Capital, in which the brokerage house has advised investors to buy the stock of Hindustan Construction. Despite the great rise in the stock after the report of Elara Capital, the stock can give a return of 35 percent to the investors from the current level.

HCC stock rises

Elara Capital has advised investors to buy Hindustan Construction stock for a target of Rs 63. The company's market cap is currently Rs 7911 crore. However, in the last 3 years, the stock has seen a strong rise due to the improvement in the financial condition of the company. The stock has jumped 34 percent in one month, 50 percent in 6 months, 139 percent in one year and 325 percent in 3 years.

On the verge of regaining its old glory

In its report on Hindustan Construction Company, Elara Capital said that due to the improvement in the financial condition of the company in the last 10 years, the company is on the path to regaining its old glory. Elara Capital said, in the financial year 2010-11, the construction industry had to bear the brunt of policy paralysis and delay in decision making by the government, due to which Hindustan Construction Company, a leading company in the infrastructure sector, also had to face bad times.

Ready to capitalise on opportunities in infrastructure sector

But after a decade of debt restructuring, resolution of disputes and monetization of non-core assets, the company is once again ready to capitalize on the big opportunities in the infrastructure sector. With HCC's experience of the last 10 years in completing in-house complexes and large projects, Hindustan Construction is ready to capitalize on the nuclear opportunities worth Rs 1.5 trillion due to its 26 per cent share in hydro power capacity and 60 per cent share in civil nuclear power capacity.

Debt burden reduced

Elara Capital said in its report, the debt burden on Hindustan Construction is decreasing significantly. Due to the recent credit rating upgrade and the removal of restrictions on bank guarantee limits, HCC will be able to bid for new projects. The company is in L-1 position with orders worth Rs 45 billion. Bids worth Rs 104 billion are under evaluation and orders worth Rs 464 billion are in the pipeline in the areas of hydro, road, nuclear, and transportation. Elara Capital expects an inflow of Rs 95 billion in 2024-25, which can see an annual growth of 15 percent in two years. If there is a partnership with private equity investors, then the company can bid for long term projects together with them, which will reduce the burden on the balance sheet.

Disclaimer: (The information provided here is for information purposes only. It is important to note here that investing in the market is subject to market risks. Always seek expert advice before investing as an investor. ABPLive.com It is never advisable to invest any money on behalf of anyone.

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