HCC's Q1FY17 profitability was better than estimates on account of higher than expected OPM (driven by higher claims recognition at Rs 600 mn). EBITDA of Rs 1.73bn (-3% YoY) was ~ 5% higher than consensus estimate as the margin stood at 17.6% (vs. est. of 16.5%). However, the net revenue of Rs 9.8bn (+1% YoY) was in-line with estimate of Rs 10bn. Thus, adjusted net profit at Rs 115mn was higher than estimate of Rs 20mn. Gross debt on standalone level stood at Rs 49.5 bn in FY16 which is expected to come down going ahead on account of debt restructuring & claims settlement. We broadly maintain our earnings estimates for FY17E/18E and believe that the recovery in investment cycle with focus on debt reduction would augur well for HCC. Maintain Buy with revised TP of Rs 32.