Institutional Equities - Online Share Trading
Institutional Equities - Online Share Trading
Institutional Equities - Online Share Trading
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<strong>Institutional</strong> <strong>Equities</strong><br />
Exhibit 9: Order inflow trend<br />
(Rsbn) (%)<br />
250<br />
200<br />
200<br />
150<br />
100<br />
50<br />
0<br />
(50)<br />
(100)<br />
117<br />
143<br />
150<br />
100<br />
97<br />
42<br />
50<br />
0<br />
FY05 FY06 FY07<br />
(68)<br />
FY08 FY09<br />
(37)<br />
FY10 FY11 FY12E FY13E<br />
(50)<br />
(44)<br />
(100)<br />
Closing order (LHS) Order intake (LHS) % growth (RHS)<br />
Source: Company, Nirmal Bang <strong>Institutional</strong> <strong>Equities</strong> Research<br />
Higher working capital requirement to restrain project execution<br />
During FY08-11, there was a significant jump in working capital requirement, at 0.5x FY11 sales (adjusted for<br />
loans and advances given to subsidiaries) and working capital days increased to 300 days in 1QFY12. We<br />
believe the working capital requirement has reached an alarming level which cannot support the robust growth<br />
in project execution. Hence, we believe that despite order-backlog/bill ratio persisting at 4.1x; the company’s<br />
revenue would show a CAGR of 16% over FY11-13E. The company may consider increasing sub-contracting<br />
to expedite project execution, but it would impact the margins.<br />
Exhibit 10: Revenue growth trend<br />
(Rsbn) (%)<br />
60<br />
50<br />
40<br />
30<br />
20<br />
10<br />
-<br />
14.9<br />
19.9<br />
23.6<br />
30.8<br />
33.1<br />
36.4<br />
40.9<br />
47.4<br />
55.3<br />
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12E FY13E<br />
Revenue (Rsbn)<br />
Source: Company, Nirmal Bang <strong>Institutional</strong> <strong>Equities</strong> Research<br />
Growth (%) (RHS)<br />
BOT asset portfolio valued at Rs16.5bn (equivalent to market cap of parent company)<br />
HCC Concessions (a 100% subsidiary of HCC) has a portfolio of six BOT assets having total project cost of<br />
Rs55bn, five based on toll collection and one based on annuity. Two road projects are operational, one project<br />
is in advanced stage of construction and three projects are expected to be completed by 3QFY13. Total equity<br />
requirement for the six projects would be Rs12bn, in which the company has already invested Rs6.53bn.<br />
Looking at the recent momentum in NHAI orders, we believe the company would achieve the target of asset<br />
ownership of Rs150bn by FY15. Recently, the company diluted its 14.5% stake in HCC Concessions to the<br />
Xander Group for Rs2.4bn, which has valued HCC Concessions at Rs16.5bn (equivalent to market cap of the<br />
parent company).<br />
45<br />
40<br />
35<br />
30<br />
25<br />
20<br />
15<br />
10<br />
5<br />
71 HCC
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