Dredging corporation of India (DCI) Q1FY17 operating revenues degrew 21% (down 24% QoQ) to | 132 crore. However, due to write back of repair liability to an extent of | 6 crore accounted in other operating income the de-growth in total revenues moderated to 15% YoY (down 19% QoQ) to | 142 crore (I-direct estimate: | 171.4 crore) . Following the lower execution, EBITDA for the quarter was impacted by higher fixed costs. Subsequently, EBITDA declined by 37% YoY (down 46% QoQ) to | 29 crore (I-direct estimate: | 46.7 crore) . Dismal operating performance coupled with continued higher depreciation resulted a PAT of | 4 crore (I-direct estimate: | 19 crore) as compared to | 46 crore in Q1FY16 and | 54 crore in Q4FY16.

Although, DCI added three new three new maintenance dredgers since 2012, the revenues grew maintenance dredgers since 2012, the revenues grew by mere 8% CAGR by mere 8% CAGR over FY12 to FY16. The over FY12 to FY16. The proceeds from proceeds from proceeds from Sethusamudram project Sethusamudram project Sethusamudram project to the tune of tune of | 300 -400 crore 400 crore 400 crore is taking long time to accrue. I is taking long time to accrue. I is taking long time to accrue. Indigenization of ndigenization of spares for spares from BEML and improved efficiency spares for spares from BEML and improved efficiency due to due to refurbishment of aged dredgers would remain key for margins. margins. Given the Given the incessant deterioration in revenues incessant deterioration in revenues in revenues we revise our esti we revise our esti we revise our estimates downwards mates downwards and reduce our target price to | 425 with a HOLD and reduce target price to | 425 with a HOLD rating. rating.