Buy Action Construction Equipment; target of Rs 240: ICICI Direct

ICICI Direct's research report on Action Construction Equipment

Action Construction (ACE) reported a strong Q4FY18 wherein revenue grew ~60% YoY to | 367.5 crore driven by growth across all segments. EBITDA margin rose 643 bps YoY to 10.4% largely driven by higher capacity utilisation leading to benefit of operating leverage while PAT grew ~8.9x to | 21.5 crore.

Outlook

Accordingly, we estimate 21.4% growth in topline, with 35.6% growth in EBIDTA and 44% growth in PAT for ACE in FY18-20E. At an estimated EBITDA of | 14.3/share, we value ACE at ~16x EV/EBIDTA and maintain our target price of | 240. We reiterate our BUY recommendation on the company.