Geojit Financial Services is bullish on Ahluwalia Contracts has recommended buy rating on the stock with a target price of Rs 385 in its research report dated June 06, 2017.
Geojit Financial Services' research report on Ahluwalia Contracts
The current order book stands at Rs 3,553cr which is 2.5x FY17 revenue which provides visibility over the next 2-3 years. However, the management were little conservative on bidding new projects due to increasing aggressive bids by peers. The company is targeting an order inflow of Rs 15bn in FY18E (Rs 20bn early) with a revenue growth of 12-13% (15% early).
The current disruptions in operational activity may put pressure on margins in the near term while a healthy order book of 2.5x FY17 revenue provides visibility. We expect revenue & PAT to grow at a CAGR of 14% & 31% over FY17-FY19E. We value AHLU at a P/E of 16x on FY19E EPS & Kota BoT 0.9x P/BV to arrive at SOTP price target of Rs 385 & reiterate our BUY rating.
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