Reduce Ahluwalia Contracts; target of Rs 212: Dolat Capital

Dolat Capital's research report on Ahluwalia Contracts

ACIL reported revenue above estimates, however EBITDA margins and PAT much below estimates. ACIL posted 14.4%/ (59.5%)/ (80.3%) YoY growth in revenue/ EBITDA/ PAT to Rs5.5 bn/ Rs230 mn/ Rs61 mn in Q4FY20. We reduce our revenue estimates by 20.1%/ 8.5% for FY21E/ FY22E on account of lockdown due to covid-19. We factor EBITDA loss in H1FY21E leading to reduction in EBITDA margin estimates by 712/ 19 bps for FY21E/ FY22E to 4.9%/ 12.0%. Accordingly, we drastically reduce our PAT estimates by 95.1%/ 13.2% for FY21E/ FY22E. We estimate a 0.5%/ 35.5% revenue/ PAT CAGR over FY20-22E.

Outlook

ACIL should remain a net cash company, with an average RoCE/ RoE of 11.7%/ 7.2% over FY20-22E. The stock is down/ increased ~35%/ 22% since our Q3FY20 result update/ covid-19 report dated 14 Feb’20/ 24 Mar’20, the current price leaves limited upside. Thus we downgrade to Reduce with a downward TP of Rs212 (12x FY22E EPS).

Ahluwalia Contracts 02072020-dolat