PINC Research has maintained hold rating on Ahluwalia Contracts (ACIL) with a target price of Rs 128 in its May 31, 2011 research report.
"Ahluwalia Contracts (ACIL) reported a mixed result for the quarter. The positive being improvement in execution with 52% QoQ growth in Sales at Rs5.8bn (PINCe Rs3.9bn), however operating margins dipped to 6.4% on account of higher overheads, labour and employee costs. Material prices likely to have dented EBITDA margin by 1% on a yearly basis, ACIL ended the year with EBITDA margin of 9.3%."
"At CMP the stock is trading at PE of 8.9x and 7.1x of FY12E and FY13E earnings. Our EPS for FY12 is reduced to Rs12.8 from earlier Rs14.5, our target price stands reduced to Rs128 (10x FY12E earning of Rs12.8) from Rs145. We believe ACIL is better placed than its peers in terms of balance sheet and execution capabilities, but would like to see how order inflow and operating margin pan out in the near term. This quarter has provided some relief towards execution which if maintained could lead to upgrade of our estimates, we thus maintain our 'HOLD' recommendation," says PINC Research report.
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