Buy HCC; target of 171: Karvy

By SiliconIndia   |   Tuesday, December 29, 2009   |    5 Comments
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Bangalore: By expecting a robust growth, Karvy Stock Broking is bullish on Hindustan Construction Company (HCC) and has recommended a buy rating on the stock with a target price of Rs. 171. Karvy believes that HCC is in a sweet spot with core construction business on a growth trajectory driven by improving visibility for new order inflow and 135 percent higher infrastructure investments in Eleventh Five Year Plan. HCC is an India-based infrastructure company that operates in segments like engineering and construction, real estate and comprehensive urban development and management. The company executes projects such as transportation, power, marine projects, oil and gas pipeline constructions, irrigation and water supply, utilities and urban infrastructure. Its subsidiaries include HCC Infrastructure, HCC Real Estate and Lavasa Corporation. Karvy expects the company's order book to grow at compound annual growth rate (CAGR) of 19 percent over the next two years to Rs. 233 billion, mainly driven by sectors like hydro power and irrigation. According to Karvy, HCC's revenue would grow at CAGR of 26 percent over financial year 2010-11 and will be able to sustain margin at higher level. In addition to that, value unlocking from its foray into real estate primarily Lavasa Corporation would add significant value to HCC's shareholders, says Karvy. With the recommended target price of Rs. 171, if the stock is bought at Monday's closing price of Rs. 151.05, the percentage of gain would be 13.20 percent.
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