Buy Ahluwalia Contracts; target of Rs 700: HDFC Securities

HDFC Securities is bullish on Ahluwalia Contracts has recommended buy rating on the stock with a target price of Rs 700 in its research report dated May 29, 2023.

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May 31, 2023 / 09:29 IST

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HDFC Securities' research report on Ahluwalia Contracts

Ahluwalia Contracts (AHLU) reported revenue/EBITDA/APAT of 8.6/1.1/0.8bn, (missing)/beating our estimates by (17.7)/9.5/10.8%. While surpassing its FY23 order inflow (OI) guidance of INR 45bn with an OI of INR 50.6bn, the order book (OB) as of Mar’23 stood at INR 81.6bn. With an OI of INR 37.5bn in FYTD24, the OB as of date stands at ~INR 120bn (~4.2x FY23 revenue). The OB is well-diversified, providing a natural hedge from a slowdown in any particular business/geography segment. AHLU guided for FY24 revenue to grow by 20% YoY, with EBITDA margin (excl. other income) at ~11%+ and an OI of INR 20-25bn in the remaining part of the year.

Outlook

Given robust inflows, better margins and pick-up in execution, we recalibrate our FY24/25E EPS higher and increase the multiple to 14x from 13x. We maintain BUY on the stock, with an increased TP of INR 700/sh .

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