Hindustan Construction Company Ltd (HCC) is poised for significant growth, with brokerage firm Ventura recommending a 'Buy' rating and a price target of Rs 42, indicating a potential 126% upside over the next 24 months. This optimistic outlook comes despite the company reporting a decline in its second-quarter FY27 financial results.
Infrastructure Spending Fuels Optimism
Ventura's positive stance on HCC is primarily driven by India's robust infrastructure capital expenditure, which saw a 9% year-on-year increase to Rs 12.2 lakh crore for FY27. This substantial allocation spans key sectors including railways, roads, defense, energy, and urban development, creating a favorable environment for construction companies like HCC.
The brokerage highlighted HCC's extensive experience in executing complex projects across hydropower, tunneling, nuclear, metro, and transport sectors as a key strength. Marquee investor Mukul Mahavir Agrawal holds a notable stake in HCC, owning 50 million equity shares, or 1.91% of the company, as of September 30, 2026.
Q2 FY27 Performance and Future Outlook
For the second quarter of FY27, HCC reported consolidated revenue of Rs 897 crore, a decrease of 6.7% year-on-year and 9.7% quarter-on-quarter. Profit after tax (PAT) saw a sharper decline, dropping 52.8% YoY and 55.8% QoQ to Rs 23 crore, impacted by a stagnant order book, lower other income, and higher tax and interest accruals at non-material subsidiaries.
Despite these challenges, Ventura anticipates a turnaround, projecting HCC's revenue, EBITDA, and net profit to reach Rs 6,276 crore, Rs 906 crore, and Rs 612 crore, respectively, by FY29. This improvement is expected as project execution scales up, supported by debt reduction efforts, disciplined bidding, and anticipated order wins.
Strong Order Pipeline and Debt Reduction
HCC's current order backlog stands at Rs 12,901 crore. The company has L1 bids worth Rs 2,010 crore, with its share amounting to Rs 1,557 crore, and 16 bids totaling approximately Rs 34,805 crore under evaluation, where HCC's share is about Rs 32,386 crore. The company aims to roughly double its order book by the end of FY27, backed by a pipeline valued at Rs 85,907 crore.
In terms of financial management, HCC prepaid Rs 100 crore of debt in Q2 FY27 and plans further repayments of Rs 108 crore by December 2026 and approximately Rs 350 crore by March 2027. Additionally, the Supreme Court upheld a Rs 210-crore arbitration award in HCC’s favor, with the amount expected in Q3 FY27, further bolstering its financial position.
Ongoing projects, including tunneling work at Indore and Patna Metros and progress at Bhivpuri PSP, Vishnugad Pipalkoti HEP, and Tapovan Vishnugad HEP, underscore the company's active role in India's infrastructure development. However, Ventura noted low promoter holding as a key risk factor for the company.