You seldom find stocks that see such whopping gains in 3-trading days. But, that has happened to the stock of Hindustan Construction or HCC and here is why. Most importantly, should you buy it now is the important question.
The government took a decision that infrastructure companies should be paid arbitration awards quickly. HCC will immediately be able to reduce its debt by almost half as a result and within 12 to 24 months.
That is a good decision for infrastructure companies like HCC.
This Stock Gained 60% In 4-Days And Here Is Why
A reduction in debt by half, means, HCC could see interest costs falling by half on debt repayment.
This could improve working capital for the company and push for more projects and better project execution.
The share was last trading at Rs 37.50, as against a share price of Rs 22.50 seen on Aug 30, showing gains of more than 60 per cent in just 4-days
Recently, Hindustan Construction Company was also recently awarded a prestigious contract worth Rs. 1749.59 crore by IRCON International Ltd to construct
two tunnels and a bridge on Katra -Banihal Sectionof Udhampur -Srinagar -Baramulla New BG Railway Line Project.
This is a boost to its order book.
Fall in interest rates to benefit the company
The fall in overall interest rates, should benefit the company as it has a high debt burden of more than Rs 4000 crores.
Should you buy the stock now?
This is something that is difficult to say, because the stock has gone-up significantly in the last few days.
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