Prabhudas Lilladher's research report on ITD Cementation India
ITD cementation reported strong set of numbers as revenues (up 33% YoY) marginally missed estimates while margins surprised positively. However, due to the second wave of Covid, execution at project sites have dipped by ~15% in Apr-May’21. The company witnessed improved liquidity position as it reduced gross debt by ~Rs1.4bn in 4Q taking net D:E to 0.2x. With strong order book position, healthy bid pipeline (Rs880bn) and improved liquidity position on one hand and headwinds due to second wave of Covid on the other, management guided for conservative 15-20% revenue growth in FY22E.
Outlook
Considering the probable impact on execution due to second wave of Covid and conservative management guidance, we have reduced our revenue/ earnings estimates for FY22 by 4.9%/14.6%, while keeping FY23 estimates largely unchanged. At CMP, the stock trades at a P/E of 14.3x/8.6x on FY22E/23E EPS and an EV of 4.8x/ 3.4x on FY22E/23E EBITDA. We maintain BUY rating on the stock with a TP of Rs97 (same as earlier).
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