Hindustan Construction Company (HCC) extended its post–rights-issue weakness , with the stock down about 5.4% at Rs 18.85 on the BSE, after opening at Rs 19.77 and slipping to an intraday low of Rs 18.82.

Volumes were healthy at nearly 32 lakh shares versus a two-week average of about 51 lakh, and the counter now trades less than a rupee above its 52-week low of Rs 17.97 and at less than half its 52-week high of Rs 40.23. At current levels, HCC’s market capitalisation is around Rs 4,940 crore, implying a consolidated trailing P/E in the low-20s.

The immediate overhang is the Rs 1,000 crore rights issue, which turned the stock ex-rights on December 5. HCC will issue about 80 crore shares at Rs 12.50 each (face value Re 1 plus Rs 11.50 premium), in a 277-for-630 ratio. Based on the pre–record date close of Rs 25.94, the theoretical ex-rights price works out to roughly Rs 21.8 per share, so the apparent 23% plunge on December 5 to around Rs 20 was largely a mathematical adjustment rather than a collapse in underlying value.

What is more telling is that, three sessions later, the stock has slipped further to below Rs 19 — now trading not just below TERP but moving closer to the rights price itself, signalling that the market is assigning a modestly higher risk premium to the name post-announcement.

Part of that caution stems from fundamentals. HCC’s Q2 FY26 results showed consolidated net profit down about 25% year-on-year to Rs 47.8 crore on revenue of roughly Rs 960–980 crore, with both sales and EBITDA under pressure.

Over the past three years, standalone revenues have been broadly flat to declining, while PAT has fallen from about Rs 253 crore in FY23 to Rs 85 crore in FY25, even after a major debt-resolution exercise and the transfer of Rs 2,854 crore of liabilities to a special purpose vehicle. Ratings reports still flag a stretched capital structure and significant repayment obligations despite earlier measures.

The rights issue,  coming on the heels of a Rs 600 crore QIP in late 2024 is therefore being read as another step in a drawn-out balance-sheet repair, rather than a pure growth fund-raise. While the discount of roughly 48% to pre-issue price is meant to encourage participation and shore up equity, it also highlights the degree of dilution: if fully subscribed, the rights shares will expand the equity base by about 35 to 40%, which investors are now pricing in ahead of the issue opening on December 12 and RE trading/renunciation up to December 17.

In that context, today’s fall looks less like a fresh “event” and more like continued re-rating as the market digests (a) sizeable dilution at a low issue price, (b) still-subdued earnings momentum, and (c) a long, ongoing deleveraging story. Near term, price action is likely to stay volatile around the rights window, with sentiment driven by subscription trends and any incremental commentary on how effectively the Rs 1,000 crore will translate into stronger order execution, lower finance costs and a clearer path back to sustainable profitability.