Edelweiss Securities has maintained 'Buy' on HCC with target price of Rs 50 as against current market price Rs 31 in its report.

Hindustan Construction Company (HCC) reported Rs 206 million profit in Q4FY15 (our estimate Rs 474 million loss), aided by settlement of Rs 2.5 billion claims on certain projects. As per management, Rs 7.8 billion claims were recognised in FY15 from which Rs 2.7 billion cash was realised. While FY15 top line was up 2% YoY, claims recognition boosted reported EBITDA margin by 300bps YoY to 18.9%.

''The recent Rs 4 billion QIP issue, claims settlement and asset sale are likely to help HCC in checking high leverage and interest costs. Maintain 'BUY' with a revised SOTP-based target price of Rs 50 (Rs 52 earlier). We expect HCC's debt/equity to fall to 2.7x in FY16 (3.6x as at FY15 end), as fund raising/asset sale lead to decline in debt levels,'' said the broking firm.

''We believe claims settlement, fund raising in Lavasa along with asset sale can help reduce leverage. This will check interest costs and address investors' concerns. We incorporate the recent fund raising and asset sale and arrive at our revised target price of Rs 50 - Rs 23/share from EPC business (valued at 1-year forward book value), Rs 15/share from BOT projects (DCF valuation) and balance from Lavasa. Maintain 'BUY','' it added.

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