Hindustan Construction Company (HCC) has received a reaffirmed credit rating of CARE BBB-; Stable for its bank facilities and debentures. This reaffirmation follows a significant improvement in the company’s financial risk profile, largely driven by a reduction in total debt from ₹3,279 crore as of March 2025 to ₹2,016 crore by March 2026. The improvement is credited to successful fund-raising through a ₹1,000 crore rights issue and arbitration proceeds.
Financial Risk Profile Strengthened
The rating agency has highlighted that the company’s financial risk profile has seen consistent improvement. A primary factor is the substantial reduction in debt levels, which dropped by over ₹1,200 crore during the last fiscal year. This deleveraging was supported by a ₹1,000 crore rights issue completed in December 2025 and the recovery of ₹720 crore from arbitration awards through the issuance of bank guarantees. These funds were effectively utilized for debt servicing and working capital support.
Strategic Reduction in Contingent Liabilities
A key development for the company is the significant reduction in its contingent liability risk. The corporate guarantee extended by the company to its special purpose vehicle, Prolific Resolution Private Limited (PRPL), has been successfully reduced from 100% of the carved-out debt to just 20%. This brings the exposure to PRPL’s debt down to ₹571 crore, which significantly strengthens the company’s standalone credit profile.
Order Book and Future Outlook
As of December 31, 2025, the company holds an order book of ₹13,148 crore, providing clear revenue visibility for the medium term. This portfolio is well-diversified, with 65% in the Transportation segment, followed by Hydro (19%), Water works (12%), and Nuclear/Special projects (4%). While revenue moderated in FY25 to ₹4,526 crore due to project delays, PBILDT margins showed resilience, improving to 13.43%. Looking ahead, the company expects to maintain margins above 10%, supported by the execution of recently mobilized projects.
Liquidity and Operational Challenges
Despite the positive trajectory, the rating remains constrained by elevated gross current asset days and slow recovery of disputed debtors. However, the company is in the advanced stages of resolving arbitration claims aggregating to approximately ₹700 crore – ₹1,000 crore, which is expected to further boost liquidity in FY27. Management continues to prioritize project execution and the stabilization of working capital cycles to ensure long-term financial health.
Source: BSE
