Engineering and construction major Hindustan Construction Company’s (HCC) stock price moved up nearly 20 per cent to Rs 41, following a communication from the National Highways Authority of India and National Hydro Power Corporation regarding arbitration award payment.

Arbitration payments are measures to release part of the payment for projects which were already awarded to companies but are being contested.

Following the proposal from NITI Ayog, the company will get 75 per cent of arbitration award amount of approximately Rs 2,000 crore within four to six weeks.

As of September 30, 2016, the arbitration award for HCC stood at Rs 3,427 crore, while further claims close to Rs 4,173 crore are in arbitration process.

Bottlenecks removed

This award for HCC, which is into construction and engineering of transport, water, nuclear structure and building infrastructure, should improve its earnings visibility.

At the end of September, the order book for HCC stands at Rs 21,300 crore. The current approval should be a booster to the order book and increase the company’s revenue and cash flow significantly.

Turnover for 12 months ended March 2016 stood at Rs 4,190 crore, 2.6 per cent lower than that for the same period a year earlier.

At the end of March 2016, the debt to equity ratio was 1.33. Profit after tax and operating margin for the same period was Rs 85 crore and 20 per cent, respectively.

The company’s net revenue for the quarter ended September 2016 was lower at Rs 911 crore compared to the last quarter September of Rs 962 crore. Profit after tax for the quarter ended September 2016 was Rs 23.1 crore compared with Rs 40 crore for quarter ended September 2015.

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