Prabhudas Lilladher is bullish on ITD Cementation India has recommended buy rating on the stock with a target price of Rs 67 in its research report dated June 19, 2020.
Prabhudas Lilladher's research report on ITD Cementation India
ITCE’s posted strong operating performance in 4QFY20 led by robust execution (up 25% YoY) resulting into stellar EBIDTA margins of 11.4%. In a phased manner, the company has commenced operations at its major project-sites and is currently operating at 50-55% efficiency. However, execution is taking a hit as only 50% of labour (8,500 vs 18,500) is available. Further, due to Covid-19 and nationwide lockdown, the execution for Rs40-45bn projects pertaining to some of its clients have been delayed to 3QFY21 (vs earlier expectation of 1Q). Given a strong balance sheet and cash flow position, the company has not availed any moratorium on its loans.
ITD Cementation (ITCE) is a dominant player in the urban infra space with a MNC parentage. We remain positive on the company given it’s a) healthy and diversified order book (Rs117.4bn as on 4QFY20) b) strong execution capabilities c) lean balance sheet (D/E of 0.4x) d) advanced technology and skilled labour derived from the strong MNC parentage. At CMP, the stock trades at a P/E of 21.4x/7.4x on FY21E/FY22E EPS and is trading at an EV of 4.3x/3.5x FY21E/FY22E EBITDA. We maintain BUY rating on the stock with a TP of Rs67.
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