Earnings Call Transcript - XNSE:HCC 2026-11-06

Shavik, Head of Investor Relations

Good evening. Welcome to HCC's Quarter 2 FY27 Investor Call. From the HCC Management, we have our Vice Chairman and Managing Director, Mr. Arjun Dhawan, our new CEO, Mr. Vivek Singh, our Chief Financial Officer, Mr. Rahul Shukla, and our Chief Operating Officer, Mr. Santosh Rai. With the, I may ask Mr. Santosh Rai to take you through the presentation. Over to you, Santosh.

Santosh Rai, COO

Yeah, thank you, Shovik. Good evening, everyone, and I welcome you all to the quarterly analyst presentation for Q2 FY27. We'll quickly begin with sharing the highlights for this quarter. Just a minute, please. Yeah, a brief about HCC. As you all know, we are a nearly 100-year-old organization involved in most of the sectors of infrastructure, and these are some of our numbers, what you can see on the screen in terms of our credentials. Here are the key highlights for our performance for Q2FY27. Standalone turnover of 895.8 crores and net profit of 36.8 crore in Q2FY27. Consolidated revenue of 896.8 crore and profit of 22.6 crore. Our standalone EBITDA margins are at 12.2% versus 16.1% in Q2FY26. We have been able to secure orders for 524 crores in this half part of the year, and also have been declared lowest bidders on bids worth 2,010 crores, where our share stands at 1,557 crores. It is to be noted that we have submitted more than 16 bids, around 34,825 crores, which are under evaluation. And we are at the same time working on a strong pipeline close to 86,000 crores in different sectors. We have also prepared 100 crores of debt in Q2 FY27 with a target to further prepare another 108 crores by December 2026. The Supreme Court has given an award in favor of HCC in a very important matter, and we have been successful about this. The money should be released in Q3 or 527. I'm also happy to report that the Mumbai Coastal Road Package 2, which was constructed by HCC, has won the award in the Best Project category for bridges and tunnels by none other than ENR Global Best Project Awards. Our order book currently stands at 12,901 crore. The order book backlog is largely split across the four sectors where we operate. Continued to be led by transportation sector, which has surface transport projects like bridges, underground metros, followed by hydropower projects, nuclear, and water sector. These all orders are well spread across various parts of the country. With Maharashtra still leading the pack, followed by Bihar. Some of the operational update, what you see on the screen is our Indore Metro project, where already both the machines have started working. We are driving the tunnels through the city of Indore. This is one of the largest underground packages in the country with seven underground stations and six into two kilometers, that is 12 kilometers of TBM tunneling. Patna Metro, we have been progressing well on the project. Various design stages are in advanced stages. Mobilization of diaphragm wall equipments and everything is in progress. The machines procurement is also in progress. And soon we will see a lot of activity happening on this site. Agarunda Creek Bridge continues to progress well. We have been able to complete a lot of piling on the main approach side, a lot of piling on the marine and substructure work has been progressing very well. We are going to commence the superstructure erection in a month's time from now on this project. This is Bhivpuri PSP, a thousand megawatt, which we are doing for Tata Power. You can see on the screen that the powerhouse is almost done. It's completed, and so is the main access tunnel to the powerhouse. The other works on different sections of the project are also progressing well. This is Vishnugr people, Koti. Almost 80% of the job is completed. Tunneling works are nearing completion only 830 meters of TBM tunneling balance in the HRT. Dam is nearly 80% complete, and so are the other structures at the project. At Tapohan Vishtugad, again, despite the geological challenges, the works are progressing in extreme, I can say, difficult geological conditions, but we are progressing well as per the time schedules agreed with the client. This is our FRFCF facility. A lot of works here, again, are completing in a completion stage. Almost 87% of the job is done, and we are looking forward to completing this job at the earliest. This is a Hindalco pot shell and pot superstructure project. Again, here, all the production is ongoing in line with the commitment to the clients. For one dam, the dam is completed. All the safety checks have been completed, and in fact, the reservoir filling test and everything has been completed on this project. So, only some pertinent ancillary works are balanced, which will be completed in over the next three to four months. Salal Dam, this basically is a project for rectifying the hydromechanical works in the Salal Dam, which was built by HCC in the 1970s. The operations have started on this project, and they'll be going on in full swing. I'll hand it over to Mr. Raul Shukla, our CFO, to take you through the financial statements.

Rahul Shukla, CFO

Good evening, everyone. So in this quarter, we have done 923 crores of turnover, vis-a-vis 975 crore in the same quarter last year. For this quarter, we have done EBITDA of 109 crore. PBT of 48 crores and profit after tax of 37 crores, which is more or less same as the quarter last year. On a consolidated basis, our turnover is 925 crore, EBITDA is 102 crores. Profit after tax is almost 23 crores. So not much of difference between standalone and consolidated as such because HCC is the main driver of the numbers here. So with this, we are closing the presentation and now we are open for question and answer things.

Shavik, Head of Investor Relations

Yeah, we can start the question-answer sessions. Please raise your hands, and I will request each participant to limit their questions to a maximum of two in one turn. We can come back to you once everyone has gotten a chance. Hello. Mr. Harish, please go ahead with your question.

Harish, Analyst

Good evening, Tim. Our EBITDA margins have come down to 12.1 visa visa 16 last corresponding period. Can you eliminate the point related to why this EBITDA is lower in this number?

Rahul Shukla, CFO

So, Mr. Harish, see, this construction business is kind of seasonal business, and sometimes you will see that there are some elements of the project with high margins will be executed. Sometimes some lower margin projects are executed. So, on a quarter-to-quarter basis, matching EBITDA is not very realistic. We have been maintaining that our average long-term EBITDA on year-on-year basis is in the range of, say, 13 to 14 percent. And by the end, you will be able to see that. That's what we hope to achieve. But every quarter, it's difficult to match that kind of thing.

Harish, Analyst

I understand. I understand. The second question is our standalone and the consolidated, there is no much of growth in the top line and there is a degrowth in the net profit. So can you explain any particular reason for that?

Rahul Shukla, CFO

So standalone, as I said, is the one who is driving our numbers because consolidated is not, I mean, not much of the business on subsidiary level. With regard to growth, we are currently focused on building very strong order book. Yes, Santosh mentioned that we have submitted tenders north of 35,000 crores, and we are very soon expecting these results to be announced. This will give very big boost to our order book. We are certainly targeting that by end of the year, we should be somewhere doubling our order book. And from there, these numbers will start percolating, and you will start seeing growth. Naturally, in the past, because our order book had stagnated, that's why you are not seeing much of a growth, but certainly with the progress in order booking and all, you will start seeing.

Harish, Analyst

I understand. But that probably the consolidated level has come down. So that means we are making losses in the subsidiaries?

Rahul Shukla, CFO

See, there are certain insignificant subsidiaries wherein some, these are accounting entries kind of, wherein we have given some loans and their interest accrual keeps on happening. So, it's not really any material business loss kind of situation there. But yes, at the face of it on books, it does look like a loss.

Harish, Analyst

Okay, okay. Thank you. And lastly, can you share some update on this BKC bulletin station? I'll request on this, too.

Santosh Rai, COO

Yeah, I mean, the work is progressing, I can say, slightly behind the target, but it's progressing, and so there are interfaces with other packages, and we believe we'll be able to complete it in line with the other packages.

Harish, Analyst

I would appreciate if you include into the presentation for the people to know what's happening over there. Thank you very much.

Santosh Rai, COO

Well noted. Thank you.

Shavik, Head of Investor Relations

Thank you, Mr. Hadeesh.

Harish, Analyst

Thank you.

Shavik, Head of Investor Relations

Mr. Amit Singh Chhabra, you may go ahead, please.

Amit Singh Chhabra, Analyst

Hi, sir. Amit here. Basically, I'm an investor. I have access in my KT. So, one of the priority for me, like, you know, when I can see the increment in the stake from the promoter side, because 82% of the shares were placed, and the promoter holding, like, you know, if I check from last four quarters, it's not in a good trend. So, what's your take on it?

Rahul Shukla, CFO

So, Amit, we have mentioned this earlier also. Promoters have been infusing money in the company, and they certainly look forward to infuse further money. And at an appropriate time, certainly, we look forward to increasing stake also, but certainly, depending on priorities of the company and other situations, it will happen when right opportunity is there. So, be assured that we are on track. That is there in our mind.

Amit Singh Chhabra, Analyst

One last question for mine. Also, I've noticed like, you know, from last year onwards, like we have seen a decrement in the interest portion, like around 26 percentage. Is it a part of the profit?

Rahul Shukla, CFO

So sorry, you are talking about reduction in interest.

Amit Singh Chhabra, Analyst

Yes, that portion I'm talking about.

Rahul Shukla, CFO

Yes, certainly. I mean, reduction in interest is a part of profit because it flows there, right? And I'm missing something.

Amit Singh Chhabra, Analyst

Not at all. So this was my question. And like, you know, when we can see some sort of, you know, good momentum, like in terms of, you know, you say like, you know, 35,000 CR already, like, you know, it was in bidding. So what kind of expectation from those bidding? Like, you know, how much project we can acquire as per your expectation? Any tentative number in mind?

Santosh Rai, COO

Amit, I think you might have heard our CFO saying that by the end of the year, we are looking to nearly double this order of backlog, which is currently standing at 13,000 crore. So this should give you a feel that what we are talking about. And that's our prediction, I can say.

Amit Singh Chhabra, Analyst

Thank you so much for all the questions, for all the answers.

Shavik, Head of Investor Relations

Thank you, Amit. Mr. Kunal Tokas, you can go in next, please.

Kunal Tokas, Analyst

Yes. Hello, I'm audible.

Shavik, Head of Investor Relations

Yes, please go ahead.

Kunal Tokas, Analyst

Okay. Hello and good evening. My first question is, how long will the adverse impact on expenses in the consolidated P&L continue because of various non-material subsidiaries that you talk about? How much of expense? How long will the impact that various non-material subsidiaries are having on consolidated P&Ls take by continue power?

Rahul Shukla, CFO

Mostly couple of quarters. All these things will be taken care of and interest accrual and all that is happening that will stop accruing. Couple of quarters.

Kunal Tokas, Analyst

So then the standalone in console should match pretty well on both revenue and profitability, right?

Rahul Shukla, CFO

Yes. Yes.

Kunal Tokas, Analyst

Okay. And second question is on your order book and the lack of growth there. Now we have been seeing both L1 positions in big submitted that you're giving your presentation for quite some time now, but the orders are lacking. It could be very helpful if you can explain the reasons for that. The consequences can be either industry-wide, other awards have slowed down, or something specific to HCC. And as a supplement to that, if you can also give your bid success ratio for the last one year.

Santosh Rai, COO

Yeah, so Kunal, I'll address this in two parts. Look, I think I'll answer your first question, last question first. Bid success ratio is a very difficult number to be put out like this because, you know, we are still working on it and largely we don't share this information, yeah. Coming to the reasons why this order is delayed, you will appreciate some of these orders are into. Thank you. of securing some good orders from these bids, which must, which should, you know, show our order backlog to a totally different position by the end of the year.

Kunal Tokas, Analyst

And as the CEO said, the order book, you expect to double by the end of the year. Is that right? That's a possibility. A distant possibility or a close possibility? No, I think, I think, I think, yeah, we are. All right. Thank you very much. Have a good time. Thank you.

Shavik, Head of Investor Relations

Thank you, Kunal. Mr. Chandrasekhar Daga, you may go ahead, please.

Chandrasekhar Daga, Analyst

Yeah, so this order book doubling that you're referring to, say possibly you're looking at it at the end of the calendar year or financial year?

Santosh Rai, COO

Financial year.

Chandrasekhar Daga, Analyst

Okay, okay, thanks.

Shavik, Head of Investor Relations

Any further questions? Please raise your hands if you have any further questions.

Santosh Rai, COO

Shavik, I think there are no more questions.

Shavik, Head of Investor Relations

Kunal, Kunal, you have another question? Yes, please.

Kunal Tokas, Analyst

I'll ask Kunal a question. So, the strong order that we expect would just be, as you said, in the hydro segment?

Santosh Rai, COO

It will be a blend of hydro and transport structure where we, that's our area of, you know, core focus. Yes, it could be largely led by, because we have submitted more bits in that sector.

Kunal Tokas, Analyst

Would there be any super large projects in that, that can really move the order book?

Arjun Dhawan, Chairman

So, no, I, let me just, I appreciate the, the, the, the reasons why some of these questions are, are being asked, because the, the. Further detail will give you more color, but we can't share this information. What I can basically tell you is that the bids that we have made are numerous in number, diversified across each one of our core segments. We have had probably slightly more, you know, bidding in the hydro segment in the recent months, and that's the reason why basically we've seen a little bit of delay in the first half because hydro projects tend to actually be trying to take a little more time to come to market. As far as the country's infrastructure program is concerned, there continues to be a very robust market for infrastructure projects. What I will tell you that HCC continues to be very selective with regard to the clients we pick and the contracts we choose. And so while perhaps maybe because in the recent past, we've seen a volatility in commodity prices and the fact that maybe in some segments, we've seen a little more comparative intensity, that doesn't basically change the way we think about risk and how we will price it. So I think what you will see from us is a responsible pricing of risk and the selection of clients will continue to be of the best order. And as the team has actually said, by the end of this year, we should play a substantial catch-up with regard to a building of our order book.

Kunal Tokas, Analyst

That's good to hear, Mr. Dhawan. Just to change the track to accounting, after this prepayment, what would be our debt repayment liability on the coming March?

Rahul Shukla, CFO

So, we will be paying almost, after this payment, around 350 crores should be the liability that we'll have to pay in March.

Arjun Dhawan, Chairman

And if I may add, the goal for us has been, as we've communicated very, very clearly in previous quarters, a clear imperative is to ensure that we are debt-free as early as possible, which should certainly be, I mean, we're certainly on target to do that. Next couple of years, we want to be able to achieve that purpose.

Kunal Tokas, Analyst

Okay. And if I remember from some of the earlier calls, you had talked about opportunities outside of India. Any updates on that?

Santosh Rai, COO

Yeah, we have, I mean, some of the prospects which we have been chasing, we have been qualified as a bidder into those projects. But these bids are still, I can say, 12 months away. It's a long process. We are actively pursuing it.

Kunal Tokas, Analyst

All right. Thank you very much, and have a good day.

Shavik, Head of Investor Relations

Thank you, Kunal.

Santosh Rai, COO

Thank you.

Shavik, Head of Investor Relations

Mr. Amit Singh Chhabra, please go ahead.

Amit Singh Chhabra, Analyst

Sir, no more questions from my end. I think everything has been clarified. Good work so far. I hope to see positive results in coming time.

Shavik, Head of Investor Relations

Thank you. Thank you, Amir.

Amit Singh Chhabra, Analyst

Yes, sir.

Arjun Dhawan, Chairman

I just want to just take the opportunity to just wish everybody a very, very happy Diwali to all of you and your families and look forward to speaking again in the next quarter.