HCC's Creditworthiness Stands Firm: CareEdge Affirms 'BBB-; Stable' Rating

CareEdge Ratings has reaffirmed Hindustan Construction Company Ltd (HCC) with a 'BBB-; Stable' credit rating for its overall ₹7,412 crore in bank facilities and debt instruments. This reaffirmation signals continued lender confidence in HCC's financial standing.

Rating Details

The reaffirmed ratings include 'CARE BBB-; Stable' for long-term bank facilities and 'CARE BBB-; Stable / CARE A3' for long-term/short-term bank facilities totaling ₹7,313.28 crore. Additionally, Non-Convertible Debentures (NCDs) worth ₹457.90 crore and Optionally Fully Convertible Debentures (OFCDs) worth ₹275.37 crore retained their 'CARE BBB-; Stable' rating.

Meaning of the Rating

A 'BBB-; Stable' rating indicates that HCC possesses adequate capacity to meet its financial obligations. The 'Stable' outlook suggests CareEdge Ratings foresees no immediate significant deterioration in HCC's credit profile.

Company Background and Debt Management

Hindustan Construction Company (HCC), established in 1926, is a major Indian firm executing large infrastructure projects in transportation, power, water, and industrial construction. The company has previously managed significant financial challenges, including high debt and past defaults. In September 2022, a major debt resolution plan transferred ₹2,854 crore of debt and ₹6,508 crore in arbitration claims to a Special Purpose Vehicle (SPV), Prolific Resolution Private Limited (PRPL), aiming to reduce HCC's debt burden. More recently, in December 2025, HCC reduced its corporate guarantee obligations for PRPL's debt from 100% to 20% (₹571 crore), lowering contingent liabilities. In August 2024, CARE Ratings had upgraded HCC's ratings, citing improved financial performance, increased PBILDT margins, and better liquidity from a rights issue, asset sales, and debt recovery.

Investor and Lender Implications

Shareholders can expect continued stability in HCC's access to credit markets for funding. Lenders will likely view the reaffirmed rating positively, reinforcing confidence in HCC's debt servicing capabilities. The ongoing reduction in outstanding NCDs and OFCDs, alongside previous debt restructuring, points to sustained deleveraging efforts. The 'Stable' outlook suggests no major changes are expected in HCC's credit profile in the near to medium term.

Potential Rating Risks

CareEdge Ratings retains the right to revise or withdraw ratings based on future events or information. A failure to provide required information could lead to an 'ISSUER NOT COOPERATING' classification. The ratings do not incorporate potential rating-related trigger clauses that could cause accelerated payments or volatility.

Comparison with Industry Peers

HCC's 'BBB-; Stable' rating differs from those of larger infrastructure peers. For example, Larsen & Toubro (L&T) holds significantly higher ratings like S&P's 'BBB+' and CRISIL's 'CRISIL AAA/Stable'. PNC Infratech maintains strong ratings of 'CARE AA+; Stable' and 'CARE A1+', while KNR Constructions holds 'CRISIL AA/Crisil A1+' with a stable outlook.

Key Debt Metrics

• Non-Convertible Debentures outstanding reduced from ₹753.00 crore to ₹457.90 crore.
• Optionally Fully Convertible Debentures outstanding reduced from ₹863.88 crore to ₹275.37 crore.

Future Focus Points

Investors should monitor the detailed rationale for the credit rating reaffirmation, which CARE Ratings will provide to stock exchanges. Continued progress in HCC's debt reduction and management, along with any future financial performance updates influencing creditworthiness, will be key. Subsequent reviews by CARE Ratings on HCC's credit profile will also be important.