Buy Ahluwalia Contracts; target of Rs 280: Emkay

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26 Aug, 2025 12:21

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Emkay's research report on Ahluwalia Contracts India

Revenue came in at Rs3.14 bn +25.7% YoY below our expectation of Rs3.58 bn due to delays in environmental clearances for 2 projects and unseasonal rains

EBITDA came in at Rs279 mn +49.5% YoY versus our expectation of Rs377 mn as EBITDA Margin came in lower than our expectation at 8.9% +142 bps versus expectation of 10.5%. Margins edged lower than expectation as company executed delayed/low margin orders during the quarter

Interest cost came in at Rs98.3 mn +6.5% YoY against expectations of Rs76 mn

Net profit came in at Rs174 mn +0.8% YoY lower than expectation of Rs257 mn due to lower operational profitability

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Emkay Global Financial Services

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Reduce FY16E PAT by 6.8% on marginal reduction in margins & higher interest outgo, given the revenue & margin visibility, reduction in leverage and improvement in working capital which will drive the earnings CAGR of 29% over FY15-17E. Maintain Buy, reduce target price to Rs 280/share as number of shares increases on equity dilution through preferential issue.

"We continue to remain positive on the company given a) increase in the order inflow which will help increase the execution run rate b) EBITDA margins to remain steadfast at 11.5%-12% as company booked loss making orders and bagged in value accretive orders c) reduction in the leverage from preferential share issue & easing of working capital will lead significant improvement in earnings over the next two - three years thereby improving the return ratios", says Emkay Global Financial Services research report.

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