Where are HCC shares headed in 2027? | Stock Market News

The infrastructure sector has delivered mixed performance over the past year despite continued government spending on roads, railways, metros, and other projects.

Companies with strong balance sheets, healthy order books, and consistent execution have generally performed well. Those with slower execution, margin pressures, or high debt have underperformed.

Although the sector's long-term outlook remains positive, investors have become more selective, favouring businesses that can consistently convert orders into revenue and earnings growth rather than turnaround stories.

Let’s take a look at a reputed company in the space, Hindustan Construction Co. Ltd (HCC), and where the stock could be in 2027.

Before we delve into all the details, let’s tell you a little about the company itself.

HCC is one of India's leading infrastructure engineering and construction companies, with expertise in transportation, hydroelectric, nuclear, water, and urban infrastructure projects.

It has executed several landmark projects, including the Bandra-Worli Sea Link, the Chenab Rail Bridge, the Atal Tunnel, major metro systems, dams, tunnels, and expressways.

HCC enjoys a strong position in India's hydroelectric and nuclear power construction segments, having built many of the country's largest dams and power-related infrastructure.

The Q4 results of the company revealed a sizeable 38% year-on-year (YoY) decrease in the debt to ₹19.95 bn. What’s interesting is that the full impact wasn't reflected in FY26 results.

The management believes that annual interest reduction could be to the tune of ₹1,120 m in FY27. What’s interesting is that the company's debt-reduction phase isn't over yet.

The management of HCC says it is completely deleveraging the company and wants to further reduce debt. In fact, the objective is for HCC to become debt-free within a relatively short-term period.

In FY26, the company saw a 142% YoY increase in its standalone net profit to ₹2.06 bn, up from ₹849 m in FY25.

This was largely driven by improvements in operational methods, operational efficiency, cost discipline in project execution, and a focus on controlling costs despite global market volatility.

The management of the company expects to sustain these margins going forward.

In the Q4 FY26, HCC secured ₹22.9 bn of orders and a total order intake of ₹56.54 bn for FY26. This includes a ₹11 bn LOA received in April. It’s also the lowest bidder for a project valued at around ₹8.40 bn.

The company has around ₹260 bn of bids under evaluation and is prepared to submit bids worth ₹438 bn in Q1 and Q2 FY27. This makes for good revenue visibility in the years to come.

HCC is expected to be a major beneficiary of India's accelerating infrastructure push, driven by increased government spending on roads, railways, metros, tunnels, hydroelectric projects, and nuclear power.

With decades of expertise in executing complex engineering projects and a strong order book, the company is well-positioned to secure new contracts.

Its leadership in hydro and nuclear infrastructure, coupled with improving finances, could support sustained revenue growth as the infrastructure cycle gathers momentum.

These challenges are typical for infra companies.

Execution delays: Large infrastructure projects like those HCC is associated with often face delays due to land acquisition issues, environmental clearances, regulatory approvals, or unforeseen site conditions, impacting project timelines and margins.

Cost inflation: Input costs like aluminium and steel are rising. Rising prices of steel, cement, fuel, and labour can erode project margins, particularly in fixed-price contracts where cost escalation cannot be fully passed on.

Intense competition: Aggressive bidding by infrastructure companies can compress margins and make it difficult to secure profitable contracts.

Dependence on government spending: A significant portion of HCC's business comes from government-funded projects. Any slowdown in infrastructure spending or delays in project awards could affect order inflows.

Project complexity: HCC undertakes technically challenging projects such as tunnels, dams, bridges, and hydroelectric plants. Unexpected geological or engineering challenges can lead to cost overruns and execution risks.

Based on a price-to-earnings basis, HCC is not cheap when compared to L&T and J Kumar Infra. That said, there are various other factors to consider when examining a stock.

The big theme for the company is becoming a zero-debt company. Where the stock would be depends on the financial performance of the next few quarters, which in turn would depend on strong execution, debt reduction, raw material costs, and the order book.

At current valuations, it looks like investors are pricing in better performance over the next few quarters. So, room for disappointment may be minimal.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com

Equitymaster is India's leading independent equity research platform, providing in-depth research and analysis on BSE- and NSE-listed companies since 1996. As a SEBI-registered Research Analyst [Registration No. INH000021128], Equitymaster covers the full spectrum of Indian equities — bluechip stocks, midcap stocks, smallcap stocks, and microcap stocks.<br><br> At the heart of Equitymaster's research philosophy are the principles of value investing — particularly the margin of safety and the primacy of investment over speculation. All research is produced by an independent team of SEBI-registered research analysts with vast experience in Indian financial markets, using detailed systems and processes developed entirely in-house.<br><br> With over 17 lakh readers across 72 countries, Equitymaster is one of India's leading equity research publications. Since 1996, the goal has remained the same — to deliver honest, unbiased, and credible equity research that helps Indian investors make better, more informed decisions.

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