Hindustan Construction Company Ltd Q2 FY26 Earnings Analysis

- The company projects a strong growth starting from FY27 onwards, targeting around 20-25% CAGR in revenue (Page 14). - This growth will primarily come from new order intake and ramping up execution over FY27 and FY28 (Page 13). - Despite near-term flat turnover expected in FY26, the significant growth impact will be visible from FY27 as new projects begin contributing (Page 11, 13). - Order bidding pipeline is robust at ₹40,000 crores, with an expectation to secure about 25-30%, supporting future revenues (Page 9). - The business aims to maintain EBITDA margins in the 13-15% range during this growth phase (Page 14). - Gradual CAPEX ramp-up will accompany project execution growth, supporting the increase in order volume (Page 12).

- The company projects 20-25% CAGR growth from FY27 onwards, driven by order inflow and execution ramp-up. - Current FY26 turnover is expected to be similar to last year, with real growth and margin improvement anticipated from FY27 onwards. - EBITDA margins are expected to stay in the 13-15% range, with steady margins in new projects and selective bidding in mega projects offering higher returns. - Profit growth is anticipated due to accelerated execution of new orders and conversion of L1 positions to awards over the next 6-12 months. - The firm aims to be debt-free by end of next fiscal year, improving financial strength and supporting profit growth. - Earnings (PAT) have been increasing despite turnover decline, indicating operational efficiency gains. - No specific EPS guidance mentioned but implied growth in profits with margin stability and order book expansion.

- Gradual increase in capex is planned as projects get executed; capex will ramp up on a project-by-project basis (Page 12). - Mobilization advances and equipment from new projects will contribute to incremental capex build-up (Page 12). - No significant jump in gross block has been observed till now; capex will increase gradually to meet new project requirements (Page 12). - Capital raising is planned to support growth objectives, with some part of the raised capital earmarked for funding expansion (Page 14). - The company is focused on remaining largely debt-free, using capital selectively and maintaining comfortable non-fund-based limits to support growth; preference to deleverage and prepay debt (Pages 14-15). - No major strategic investments explicitly mentioned apart from project-related capex and selective capital raising for growth (Pages 14-15, 12).

- For the March 2026 debt repayment (~₹900 crore), the company plans a combination of: - Executing core BG (Bank Guarantee) transactions to reduce debt. - Utilizing cash flow from operations. - Raising capital (equity) as needed. - They are targeting to raise around ₹700-900 crore in equity during the next quarter to support repayment and maintain a cash cushion (~₹200-300 crore). - For future growth FY27 onwards, some capital is being raised this year, partly to fund growth objectives. - EPC business bidding is expected to be capital-efficient, requiring no significant capital infusion if bids are rational. - Debt reduction and deleveraging remain a priority; the company prefers to avoid fund-based debt and accumulate free cash flow reserves. - No explicit plans for raising debt were mentioned; cost of debt currently about 11% and expected to remain stable for some time.

- Current order backlog as of 30th June is approximately ₹11,188 crores to ₹11,800 crores. - There are additional L1 (lowest bidder) positions worth ₹6,000 crores not yet included in the order book. - The company expects these ₹6,000 crores orders to be signed within 30 to 45 days. - There is a robust bid pipeline of ₹40,000 crores, with a targeted hit ratio of 25-30%, implying potential order additions of around ₹10,000-12,000 crores. - The order pipeline is diversified across hydro (about 40%), urban infrastructure like metros and elevated structures (35-40%), and other sectors including water and nuclear (15-20%). - The company anticipates a substantial ramp-up in execution and order conversion from FY27 onwards, targeting 20-25% growth.