A flurry of large road building orders in the last few days have induced a new zeal in Dilip Buildcon shares as the stock rose with higher volumes on December 19.
On Thursday and Friday, the company said it received four orders worth Rs 6,167 crore to build roads in Karnataka, Jharkhand, Chhattisgarh and Telangana.
The stock traded at Rs 238, up nearly 4 percent on BSE in early deals.
The biggest of these orders is construction of four lane Urga - Pathalgaon section NH-130A under Bharatmala Pariyojana in the state of Chhattisgarh, which is worth Rs 1,955 crores. The company needs to complete it within 30 months.
The next is development of six lane Maradgi S Andola to Baswantpur (Package -lll of Akkalkot-KNT/TS Border) in the state of Karnataka, worth Rs 1,589 crore. It also has a completion period of 30 months. Four laning of Karimnagar - Warangal Section of NH-563 and "Four Laning of Mehgama-Hansdiha in the state of Jharkhand were other two orders.
Analysts are largely bullish on the stock even as they trim down expectations on road capex going ahead. Geojit Financial Services expects a recovery in execution from H2FY23 on account of improvement in inflows and completion of legacy projects.
Upgrading its rating from ‘neutral’ to ‘buy’ due to a recovery in margin expectation, it values Dilip Buildcon at a price to earnings ratio of 11 times on FY24 estimated earnings. It has target price of Rs 284.
The company management expects margins to improve further, as 95 percent of the legacy orders were executed in H1FY23 and guided 12 percent to 13 percent of margin in FY23.
HDFC Securities said it has recalibrated our EPS estimates higher to factor in margin recovery, robust order book growth, and debt reduction. “As we roll over our estimates, we maintain BUY with a sum of the parts -based target price of Rs 340 per share (12x Sep-24E EPS).
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