Synopsis: Even as HCC’s revenue dropped 31.7% to Rs 961 cr in Q2 FY26 and annual revenues fell to ₹5,603 cr in FY25, Mukul Agrawal bought fresh stake of 1.68% (~4.4 cr shares), signalling confidence in debt reduction, cash flow improvement, and a ₹13,152 cr order backlog.
Shareholding moves by well-known investors often attract attention, especially when they appear to go against a company’s recent financial performance. Hindustan Construction Company (HCC) has been facing pressure on its revenues, reflecting challenges in project execution and the broader infrastructure cycle. Against this backdrop, the decision by seasoned investor Mukul Agrawal to buy a fresh stake in the company has sparked interest, as it suggests what factors may be influencing his investment view?
Hindustan Construction Company Limited, with a market capitalization of Rs. 4,780.53 crore, closed at Rs. 18.25 per equity share, down by 4.45 percent from its previous day’s close price of Rs. 19.10 per equity share. As of December, 2025, the ace investor Mukul Mahavir Agarwal has bought a fresh stake of 1.68 percent (~4.40 crore shares) in the company.
Hindustan Construction Company Limited has delivered returns across multiple timeframes, with a 1-month return of -6.84 percent, a 3-month return of 5.67 percent, and a 6-month return of 5.49 percent. The stock has delivered a -1.71 percent return in the past 1 year and in the longer frame of 5 years it has delivered a return of 65.05 percent.
Hindustan Construction Company Limited is an India-based engineering and construction company, established in 1926 and headquartered in Mumbai. It undertakes large infrastructure projects such as roads, highways, bridges, railways, metro systems, ports, dams, tunnels, power and nuclear facilities, as well as water supply, irrigation, sewage treatment, industrial plants, and residential and commercial buildings. The company also operates in related areas including toll management, real estate development, insurance auxiliary services, and IT consulting, with projects executed in India and overseas.
Financial Performance Raises Concerns
HCC’s near-term financial performance remains weak and is a key concern for investors. In Q2 FY26, revenue declined sharply on a year-on-year basis from Rs 1,407 cr to Rs 961 cr, a fall of around 31.7 percent. Profit also dropped significantly by Rs 64 cr to Rs 48 cr, while EBITDA fell by Rs 242 cr to Rs 146 cr, indicating pressure on operating margins and execution. This slowdown is not limited to one quarter, as annual revenues have consistently declined from Rs 10,668 cr in FY22 to Rs 8,270 cr in FY23, Rs 7,007 cr in FY24, and further to Rs 5,603 cr in FY25, highlighting a sustained contraction in topline performance.
High Valuation Despite Weak Profitability
Despite inconsistent earnings and volatile profitability, HCC’s stock is currently trading at a price-to-earnings ratio of around 33.43x, which is significantly higher than the industry average PE of about 17.1x.
This premium valuation stands out, especially given the company’s history of losses and uneven profit growth in recent years. The elevated PE suggests that the market is already factoring in a turnaround in earnings and balance sheet strength, leaving limited room for error if execution or cash flows weaken further. This valuation overhang remains a key risk for investors, as sustained earnings improvement is still required to justify such multiples.
Sharp Debt Reduction Improves Balance Sheet Quality
One of the strongest positives that could explain Mukul Agrawal’s interest is HCC’s aggressive deleveraging. The company has reduced its long-term debt from around Rs 4,851 cr in March 2023 to nearly Rs 1,001 cr by September 2025, significantly lowering financial risk and interest burden. This balance sheet repair improves HCC’s ability to bid for new projects, execute existing orders efficiently, and withstand cyclical downturns in infrastructure spending.
Strong Operational Efficiency
HCC has also shown meaningful improvement in cash flow metrics, which is critical for an EPC company. The firm reported operating cash flow of Rs. 134 cr and net cash flow of Rs 171 cr, indicating better cash discipline. Its cash conversion cycle stands at a highly negative 640 days, while working capital days are limited to just 17 days.
Additionally, inventory days have been reduced sharply from 183 days to 52 days, reflecting tighter project execution, faster billing, and improved collections, all of which strengthen liquidity despite falling revenues.
Diversified Order Book
Another key factor supporting long-term optimism is HCC’s robust order backlog of Rs. 13,152 cr, as per its November 2025 investor presentation. The order book is well diversified across business segments, with transport projects contributing around 63 percent, hydro at 22 percent, water at 12 percent, and nuclear and buildings at about 3 percent.
Geographically, the backlog is spread across multiple states such as Maharashtra, Bihar, Uttarakhand, Gujarat, Madhya Pradesh, Tamil Nadu, and others, reducing concentration risk. Large projects like the Patna Metro and Hindalco’s aluminium smelter expansion provide multi-year execution visibility.
Beyond Current Weakness
Despite falling revenues and near-term earnings pressure, Mukul Agrawal’s fresh stake suggests a longer-term, contrarian investment thesis. A cleaned-up balance sheet, strong cash flows, efficient working capital management, and a sizable, diversified order book may point to an operational turnaround once execution accelerates and the infrastructure cycle improves.
The stock’s deep discount to its historical highs and long-term valuation averages could also offer asymmetric upside if profitability stabilises, which may explain why the ace investor is willing to look past current financial stress and focus on structural improvements within the company.
Mukul Agrawal’s stake in HCC seems to be a long-term and cautious bet rather than a reaction to current results. Even though revenues are falling, the company has significantly reduced its debt, improved cash flows, and managed its working capital better, which lowers financial risk. A large and diversified order book also gives visibility for future execution once conditions improve. This suggests the investor may be focusing on balance sheet strength and potential recovery in operations, while being aware that near-term performance challenges still remain.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post Mukul Agrawal buys fresh stake in this infra stock despite declining revenues; Here’s why appeared first on Trade Brains.