Centrum Research recommended accumulate rating on Ahluwalia Contracts (India) with a target price of Rs 418 in its research report dated June 08, 2018.
Centrum Research's research report on Ahluwalia Contracts (India)
Ahluwalia Contracts (India) Ltd (ACIL), for Q4FY18, reported mixed numbers. Revenue declined by 5% YoY to Rs447 crore, mainly due to slow execution and GST impact. EBITDA grew ~25% to Rs53 crore. Lower raw material cost and construction expenses led to EBITDA margin expansion of 286bps to 12%. Net profit grew 54% to Rs31 crore, on the back of lower interest cost. As of Mar’18, ACIL has reduced debt to Rs30 crore (vs Rs90 crore in Mar’17). ACIL has declared a dividend of Rs0.3/share, for the first time in the last 6 years.
Given the government’s focus on buildings, healthy bid pipeline and opportunities in the higher ticket size orders (Rs500 crore+), we anticipate ACIL to be a beneficiary of the same. We maintain our Accumulate rating and value the company at 16x FY20E EPS giving a target price of Rs418.
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