Buy Ahluwalia Contracts; target of Rs 200: Dolat Capital

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26 Aug, 2025 12:21

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Dolat Capital`s research report on Ahluwalia Contract

“Ahluwalia Contract (ACIL) is a leading contractor in the building construction space. The company has had a successful track record of executing marquee projects across residential, commercial and industrial space. Several issues (project/ payment delays and the consequent cost inflation) which had bogged down the performance over the last three years are now behind the company. ACIL is now well placed to leverage on its strong track record and the huge impending opportunity to grow its order book over the next 2 years. We expect the company to register an earnings growth of 104% over the next two years. We initiate coverage with a BUY rating and a target price of ` 200 per share, implying 36% upside from current levels.” “ACIL has a strong track record of executing marquee projects across residential, commercial, and industrial space. The same includes several integrated townships, commercial parks, high end hotels and hospitals across the country. ACIL has executed projects for leading players both in private and public sector. ACIL is one of the few integrated building contractor in India to execute large turnkey projects providing it enough room to pick and chose orders. Several issues like project/ payment delays (thereby cost overruns), cost inflation and issues with Emaar had bogged down ACIL’s performance leading to losses in FY12 & FY13. In the last three years, the company has been in the consolidation mode, wherein it slowed down its order inflows to complete the projects in hand. With substantial completion of such loss making/ slow moving projects, the company has now well geared to take new orders going ahead. In respect of Commonwealth games, the CBI enquiry against CPWD in respect of Talkatora Stadium Project has been closed and ACIL expects to receive the pending due from CPWD by the end of Dec-14. The arbitration process with Emaar is underway and the management is confident of a favorable outcome.” “On the back of expected revival in order book and margins we expect ACIL to report a strong jump in revenues (23% CAGR over FY14-16E). Strong revenue growth would also mean a revival in margins to ACIL’s historical levels of 10-12%. Consequently we expect a PAT CAGR of 104% over FY14-16E period. Based on our FY16E EPS estimate of ` 13.5 per share, the stock trades a P/E multiple of 10.9x, which we believe is quite attractive considering the ACIL’s credentials and improvement in financial performance. We value the stock at ` 200 per share (one year forward P/E of 15x) implying an upside of 36% from current levels. We initiate coverage with a BUY rating on the stock,” says Dolat Capital research report. 

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