Category: Equity Research

Hindustan Construction Company (HCC) is one of the largest private sector construction companies in India engaged in construction of technologically complex long gestation projects across all verticals in infrastructure space.

HCC has also forayed into the escalating Indian real-estate market by floating HCC Real Estate, a 100% subsidiary of the group. The company had transferred the development rights of its land at Vikhroli, Mumbai, and investments in the Lavasa hill-station development project, to HCC Real Estate. Lavasa is a blend of cosmopolitan architecture, imaginative planning and environment ideals, planned and based on the Principles of New Urbanism (NU). (more…)

Citi continues to retain a BUY recommendation on Alok Industries. 4QFY08 revenues grew 26% YoY with EBITDA growing 37% YoY on margin increase by 190bps to 24.9%. Recurring net profit excluding forex gain/loss (loss of Rs110m in 4QFY08) increased 24% YoY. For FY08, revenues increased 18% and net profit grew 22%, in-line with estimates. (more…)

Castrol’s 1Q08 net profit of Rs728m (up 76% yoy and 28% qoq) was 45% higher than expected, mainly due to higher sales and lower-than-expected costs.Castrol managed to show exceptional performance on volumes and realisations. It reduced its inventory and debtor days to 37 and 24, respectively (from 46 and 34 the previous year). At the same time it increased its creditors days, thus managing negative working capital with a cash balance of Rs27 per share. (more…)

Tier-II Software Companies, Hexaware Technologies and KPIT Cummins Infosystems have been downgraded by Citi to a SELL.

Hexaware:
Hexaware reported revenue of US$67m (exp. of US$69m). Lower SG&A spend led to net profit of Rs209m (exp. of Rs211m). Out of the last 5 quarters, headcount has declined in 3; even next quarter hiring outlook is muted – this does not inspire confidence on the outlook for rest of the year. New order booking during Q1 was US$42m (~US$70m in 4Q and US$270m+ in CY07). (more…)

Sesa Goa managed by Anil Aggarwal of vedanta is India’s largest private sector exporter of iron ore with mining activities in Goa, Karnataka and Orissa and also owns a prospecting license in Jharkand. Kotak has initiated coverage with a BUY recommendation ahead of the Bonus and Stock split.

Expect company to double the annual iron ore sales to 25MMT in next five years while rising 20% to 15MMT in FY09E from the 12.4MMT in FY08. Sesa Goa should be able to negotiate additional mining contract agreements in the coming years. (more…)

Unity Infa has a strong track record spanning two decades with quality certifications in civil design and construction enable the company to pre-qualify and also garner repeat orders from large clients like the Maharashtra Municipality, Indiabulls, MIAL, Delhi Development Authority, and several state governments. The company has a healthy order book of Rs 25.6bn (3.3x FY08E sales) which is to be executed within 28-30 months, signifying strong revenue visibility. (more…)