CARE maintains fundamental grade of 4/5 on ACIL

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CARE maintains fundamental grade of 4/5 on ACIL

CARE Research has come out with its report on Ahluwalia Contracts India (ACIL). The research firm has assigned a valuation grade of 5/5 and fundamental grade of "4/5" to the company, in its July 12, 2011 report.

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CARE Research has come out with its report on Ahluwalia Contracts India (ACIL). The research firm has assigned a valuation grade of 5/5 and fundamental grade of "4/5" to the company, in its July 12, 2011 report.

ACIL reported Q4YF11 revenues of Rs 5.75bn registering a growth of 17.5% yoy basis while PAT declined by 20.0% to Rs 122mn. EBITDA margin for the quarter came in at 5.4% on account of higher RM costs. Overall, FY11 revenues were higher by 7.8% to Rs 16.9bn while PAT declined by 13.4% to Rs 708mn.

Revenue growth was flat, expect resurgence ahead
Revenue growth for the year under review was relatively flat to 7.8% to Rs 16.9bn on account of slowdown in execution in some real estate projects. Going forward, we expect revenues to increase by 15% in FY12E on account of improvement in execution of projects.

Strong order inflow continues
The order book as of FY11 stands at Rs 34bn, indicating a book to bill ratio of 1.8x of FY12E earnings. We believe this provides reasonable revenue visibility for next 2 years. Order inflow for the year was strong at Rs 21bn, up by 37% yoy.

Margins under pressure
EBITDA margin for FY11 came in at 8.9% which was below our expectation on account of cost overruns and time delays in execution of orders. Further, PAT margins came in at 4.2%, down by 100bps on yoy basis.

Valuation
The CARE Equity Research assigns valuation grade of 5/5 to ACIL based on the Current Intrinsic Value (CIV) of Rs.165 as against Current Market Price (CMP) of Rs127, indicating that shares of ACIL have 'Considerable Upside Potential', says CARE Equity Research report

Disclaimer: This report is prepared by CARE Research, a division of Credit Analysis & REsearch Limited [CARE]. CARE Research has taken utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain or from sources considered reliable. However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE Research operates independently of ratings division and this report does not contain any confidential information obtained by ratings division, which they may have obtained in the regular course of operations. Opinions expressed herein are our current opinions as on the date of this report.

CARE's valuation of the security is mainly based on company specific fundamental factors. Equity prices are affected by both fundamental factors as well as market factors such as - liquidity, sentiment, broad market direction etc. The impact of market factors can distort the price of the security thereby deviating from the intrinsic value for extended period of time. This report should not be construed as recommendation to buy, sell or hold a security or any advice or any solicitation, whatsoever. It is also not a comment on the suitability of the investment to the reader. The subscriber / user assumes the entire risk of any use made of this report or data herein. CARE specifically states that it or any of its divisions or employees have no financial liabilities whatsoever to the subscribers / users of this report. This report is for personal information only of the authorised recipient in India only. This report or part of it should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person, especially outside India or published or copied for any purpose.

To read the full report click on the attachment