Buy Ahluwalia Contracts; target of Rs 209: Justtrade.in

“Ahluwalia Contracts (India) (ACIL) is promoted by Bikramjit Ahluwalia and is into the construction business with strong backward integration. It is also into the manufacturing of ready mix concrete (RMC). ACIL is a strong player in the construction space with highest asset turnover ratio among the peers and enjoys robust clientele. It has been able to secure repeat orders from several clients such as ITC, Hotel Leela, etc.”

“Between FY07 and FY10, order book has grown with a CAGR of 48% to Rs 5,300 cr. Its current net order book stands at Rs 3,200 cr, which is 1.98 times its FY10 net sales and is to be executed over the next 24 months. The order book is well diversified in terms of segment, geography and clients.”

“During the last two years, top and bottom line grew at a CAGR of 36% and 26%. Going ahead, we expect them to grow at a CAGR of 14% and 27% over the next two years. Operating and net margins are likely to be at 9.2% and 5.74% in FY11 and 9.59% and 6.26% in FY12. It is trading at a price to earning ratio of 11.7. We recommend a “BUY” on the stock with an investment horizon of 15 to 18 month and target price of Rs 209 based on ten times its FY12E EPS of Rs 20.9,” says Justtrade.in research report.

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