Buy Ahluwalia Contracts; target of Rs 568: HDFC Securities

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HDFC Securities' research report on Ahluwalia Contracts

Ahluwalia Contracts (AHLU) reported revenue/EBITDA/APAT of 7.4/0.7/0.5bn, missing our estimates on all fronts by 13/21.4/25.1%. With FY23 revenue guidance at INR 30bn, AHLU maintained 10-15% YoY growth for FY23, with reduced EBITDA margin (incl. other income) in the range of 10-11%. Margin is expected to improve from FY24 with softening of commodity prices, a narrower gap of indices with input prices, slightly lesser competitive intensity and new projects bid at elevated input price assumption. FYTD23 order inflow (OI) came in at INR 40.2bn with Q4FY23 guidance of another INR 5bn. Excluding the L1 of INR 6.7bn, the FYTD23 order book (OB) stands at INR 81.1bn (~2.7x FY23E Revenue). On the diversification front, client-wise, government orders form 82.5% of OB and, segment-wise, institutional and hospital are the major drivers, contributing 39.8/29.4%, with infra/residential/commercial/hotel contributing 11.8/11.7/6.7/ 0.8%.

Outlook

Geography-wise, AHLU is present in 16 states with East/North/ West/South/international regions contributing 42/35.8/11.5/5.3/ 5.4%. We maintain BUY on the stock, with a reduced TP of INR 568/sh (13x Dec24E EPS).

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Ahluwalia Contracts - 15 -02 - 2023 - hdfc