Ahluwalia Contracts: Ahluwalia (AHLU) surprised positively on execution front (~5x our estimate), despite the shortage of labour and considerable restriction on operation in projects within city limits, as it focused on off-site execution. While revenue declined by 38/55% YoY/QoQ, APAT declined by 78%/50% YoY/QoQ. Labour availability has improved to 40% from 20% at one point of time during the lockdown. Besides, AHLU won new orders worth Rs 3bn during the quarter, taking the order book to Rs 75bn. Gross debt decreased to Rs 430mn from Rs 520mn at FY20 end. With cash balance at Rs 1.8bn, AHLU remains a net cash company. We maintain BUY on AHLU and roll forward our valuation to June-22E with target price of Rs 286 (10x June-22E EPS). Eicher Motors: While Eicher reported a 1QFY21 loss of Rs 552mn, the demand outlook at Royal Enfield (RE) has surprised on the upside. The management highlighted that RE bookings have reverted back to pre-COVID levels, however supply chains constraints are impacting production (operating at 40% levels). Eicher Motors will acquire the bus business of Volvo India as the OEM is consolidating its presence across the CV sub segments. The stock (37.9x/27.6x on FY21/22E earnings) at current levels is adequately factoring in the recovery in our view. We have a REDUCE rating on the stock. Gulf Oil Lubricants: We reiterate our BUY rating on Gulf Oil as demand outlook has improved across segments, including the DEO segment. While 1Q volumes were weak (-40% YoY, -30% QoQ), management is witnessing encouraging recovery signs, led by...

We increase our revenue/ EBITDA margin estimates by 7.1%/ 297 bps for FY21E factoring Q1FY21 results. Accordingly, we increase our PAT estimates by 674.1% for FY21E. We broadly maintain our FY22E...

Order book stands strong at Rs76.2bn (4.2x TTM revenues) as on 1QFY21 primarily driven by Hospital (48%) and Institutional (26%) segments. Ahluwalia Contracts (ACIL) posted a decent set of results with revenues falling 21.1% YoY (vs PLe 44% decline) despite challenging environment....

Key risks include (1) Slowdown in government capex; (2) High cost inflation; (3) Extended lockdowns across States; (4) Lower than expected leasing in Kota BOT project. We maintain BUY on AHLU with unchanged TP of Rs 265 (10x FY22E EPS) despite 20% 3QFY20 miss on APAT. We downgrade our FY21E EPS by 68% to factor in higher than earlier envisaged COVID impact on execution, esp. in urban centres like MMR/NCR. We retain FY22E estimate. Ahluwalia is well placed to counter near term COVID related execution challenges owing to robust order book and strong BS. Execution efficiency now stands at ~25% and will normalise only by 4QFY20 ramping up gradually (May-15%, June-25%, July-35-40%, Aug-50%. We continue to remain patient as execution has started across all projects and will pick up full steam only by Sep-20, with overhang of stuck projects & write-offs now largely behind. While Parivahan/Gardanibagh/Mohammadpur projects are in preparatory stage with all approvals now in place and work having started, Rs 5.5bn Charbagh Station redevelopment has been foreclosed due to environment hurdle. Rs ~1.5bn Delhi Govt order has also been cancelled. The Robust balance sheet, net cash status and better than peers RoE/RoCE are other comforting factors, even as EBIDTA margins have trended downwards on one offs.

Operations resumed at all project sites with labour force at ~25% pre-covid levels (peer avg of 40-50%); Company expects to reach ~50% by Aug'20. Ahluwalia Contracts (ACIL) results were a mixed bag with revenues growing 14.4% YoY despite impact of nationwide lockdown however margins were hit...

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...

The interaction covered large Road players, Building EPC players and T&D players. Large part of the halt is (1) Due to Central/State Govt directive on lock down and work from home (2) Few clients have told Contractors for closure till 31st March 2020 & (3) Goodwill towards employees'/laborers' safety. Whilst our last week survey was more encouraging with our coverage universe execution largely on track, the call for Janta Curfew has resulted in project sites staring at closure. We interacted with 15 large Indian Infra companies to gauge on the ground impact of COVID-19 on execution.

AHLU delivered yet another 3QFY20 miss. We continue to remain patient as execution shall start on entire order backlog from 4QFY20E. While Mohammadpur project is in preparatory stage after receiving EC, Rs 5.5bn Charbagh Station redevelopment may get foreclosed due to environment hurdle. New wins of Rs 32.3bn doesn't have environment concerns. Delhi construction ban has lifted. The Robust balance sheet, net cash status and better than peers RoE/RoCE are other comforting factors. We maintain BUY. Key risks include (1) Slow down in government capex; (2) High cost inflation; (3) Stuck projects; (4) Lower than expected leasing in Kota BOT project. We maintain BUY on AHLU with unchanged TP of Rs 388 (15x FY21E EPS) despite 40% 3QFY20 miss on APAT. We downgrade our FY20E EPS by 24% to factor in slow order book to execution conversion and ~Rs 5.5bn of non moving projects. We retain FY21E estimate. Robust order book and strong BS augurs well for re-rating.

AHLU's guidance miss over the past two years (Rev/EBIDTA margins) has unnerved investors as this was on back of order book multiplying 2x (over FY18-19) and resultant expectation of higher growth delivery. Broader economic slowdown, tight liquidity, NGT ban and clients deferring project started impacting execution. However, these issues appear to be settling as execution has picked up from Nov-19. Robust BS, net cash status and better RoE/RoCE than its peers are other comforting factors. We maintain BUY. Key risks include (1) Slow down in government capex; (2) High cost inflation; (3) Stuck projects; (4) Lower than expected leasing in Kota BOT project. Despite 2x jump in order backlog during FY18-20, AHLU is forecasted to deliver 4.2% rev CAGR. Tight liquidity, EC delays/NGT ban and client specific issues impacted execution. We believe that guidance misses over the past two years are now behind and AHLU is well placed to deliver 15-20% growth over next two years. Strong balance sheet, robust cash flow and superior RoE augurs well for re-rating. We maintain BUY with TP of Rs 388. We value the core EPC operations at 15x FY21E EPS.

AHLU delivered yet another 2QFY20 miss. We continue to remain patient as execution shall start on entire order backlog from 4QFY20E. About Rs 10.6bn worth of projects (15% of OB) are slow moving of this Rs 5.5bn Charbagh Station redevelopment may get foreclosed due to environment hurdle. New wins of Rs 20bn doesn't have environment concerns. Delhi construction ban may get lifted by Nov-19 end. The Robust balance sheet, net cash status and better than peers RoE/RoCE are other comforting factors. We maintain BUY. Key risks include (1) Slow down in government capex; (2) High cost inflation; (3) Stuck projects; (4) Lower than expected leasing in Kota BOT project. We maintain BUY on AHLU with a reduced TP of Rs 388 (vs. Rs 402/sh earlier) despite 26% 2QFY20 miss on APAT. We downgrade our FY20/21E EPS by (13)/2.7% to factor in slow order book to execution conversion and ~Rs 10.6bn of non moving projects. Tight liquidity is another factor impacting growth. We value the core EPC operations at 15x FY21E EPS.

Though the global economic growth declined from 3.8% in 2017 to 3.6% in 2018, the Indian economy remained relatively steadfast. Growth in activity and capital inflows was witnessed in the Indian Construction Sector driven mainly by Government Capex. The EPC segment regained its growth momentum in 2018 due to positive developments in the economy, investments in transport infrastructure, energy and housing projects as stated in Construction in India' by Global Data. Private corporate Capex...

AHLU has witnessed strong order inflows during FY19 but somehow there has been quarterly execution misses leading to failure in achieving FY19 annual guidance. FY20 is no different with a weak quarterly start amidst tight liquidity conditions. We remain skeptical on AHLU achieving its FY20E growth guidance. Only hope is strong starting order backlog and Patna PWD project (Rs 5.2bn) breaking ground from Sep-19. Robust balance sheet, net cash status and better than peers RoE/RoCE are other comforting factors. We maintain BUY. Key risks include (1) Slow down in government capex; (2) High cost inflation; (3) Stuck projects; (4) Lower than expected leasing in Kota BOT project. We maintain BUY with a reduced TP of Rs 402 (vs. Rs 430/sh earlier) despite 25/25/33% 1QFY20 miss on Rev/EBITDA/APAT. We downgrade our FY20/21E EPS by 6.6/6.6% to factor in ~Rs 10.6bn of non moving projects. We value the core EPC operations at 16x FY21E EPS.

Subdued Performance on Execution Slowdown; Maintain BUY Ahluwalia Contracts (AHLU) has delivered a subdued performance in 1QFY20, mainly marred by persistent delay in two key projects (Rs10bn), delay in bills certification and execution slowdown due to General Elections. Revenue declined by 22% YoY to Rs3.2bn, while EBITDA and PAT declined by 26% YoY and 37% YoY, respectively. EBITDA margin stood at 12.4% (-65bps YoY and +73bps QoQ). Further, AHLU added orders worth Rs4.3bn during the quarter and is in L1 position for projects worth ~Rs7bn. Current order backlog stands at Rs60bn (3.6x of TTM revenue), which continues to remain impressive. Despite soft revenue booking in 1Q, the Management maintained...

With an order pipeline of ~Rs 50bn (dominated by hospitals, educational and metro related projects) AHLU expects ~Rs 20bn of inflows in FY20E. Even though it was quite open earlier to add private sector projects in the near term, it admits that the public sector skew will continue and is unlikely to change materially for now. AHLU has survived across cycles and has tuned itself to the vagaries of the building segment. We like AHLU's conservative bidding approach, focus on balance sheet and staying away from unnecessary diversification. We maintain BUY. Key risks include (1) Slow down in government capex; (2) High cost inflation; (3) Stuck projects; (4) Lower than expected leasing in Kota BOT project. We maintain BUY with a reduced TP of Rs 430 (vs Rs 443/sh earlier) despite 11/25/24% 4QFY19 miss on Rev/EBITDA/APAT. We have downgraded our FY20/21E EPS by 6.8/3.1% to factor in ~Rs 8.3bn of non moving projects.

Maintain BUY with reduced TP of Rs 449/sh (vs Rs 487 earlier) valuing the EPC segment at 18x Dec-20E EPS, Kota BOT 1x P/BV). AHLU posted weak numbers with Rev/EBITDA/APAT coming in 12/23/23% lower than estimate. This was primarily led by NGT related issues in both Delhi (~Rs 600-700mn revenue impact) and Bihar (~Rs 400mn impact). With fixed cost absorption on lower revenue base, EBIDTA margins slipped 545bps QoQ to 11.8%.

ACIL's net sales in Q3FY19 increased by about 16% yoy to Rs4.2bn, but came in below our estimates due to issues relating to tree-cutting in the NCR region and delays in getting approvals for a few projects. EBITDA declined 20.5% yoy to Rs496.2mn while EBITDA margin stood at 11.9% (Emkay est: 13%), due to weak execution and higher other expenses which...

Maintain BUY with an increased SOTP of Rs 465/sh (EPC segment at 18x Mar-20E EPS, Kota BOT 1x P/BV). AHLU posted strong 2QFY19 numbers with Revenue/ EBITDA/ APAT Rs 4.4/ 0.6/ 0.3bn (19/ 15/ 21% beat vs. estimates). Interest cost shot up to Rs 51mn (+10% YoY, +31% QoQ) as debt increased from Rs 340mn to 520mn QoQ.

Ahluwalia Contracts (AHLU) has reported a strong performance in 2QFY19 mainly led by rampup in execution in recently bagged projects. While revenue grew by a strong 31% YoY to Rs4.4bn (+9% QoQ) vs. our estimate of Rs3.8bn, EBITDA rose by 15% YoY to Rs574mn (+9% QoQ) and EBITDA margin stood at 13.1% vs. 14.9% and 13% in 2QFY18 and 1QFY19, respectively. Net profit grew by 21% YoY and 11% QoQ to Rs312mn vs. our estimate of Rs256mn. AHLU received order inflow of Rs31bn in FY19 YTD taking its total order backlog to Rs53bn (3.2x of FY18 revenue). Upgrading order inflow guidance to Rs40bn from Rs24bn, the Management has maintained revenue growth guidance of 15-20% with EBITDA margin of >13% for FY19 and >30% revenue growth in FY20E. We continue to maintain our positive stance on AHLU on the back of healthy...

ACIL posted 31.3% YoY growth in Q2FY19 revenue (after 2 consecutive quarter of de-growth) to `4.4 bn (9.0% above estimates) led by better execution. EBITDA margin down by 181 bps YoY to 13.1% (24 bps below estimates), primarily due to higher construction cost which is up by 258 bps YoY to 75.9% of revenue and other expenses which was partially offset by fall in employee cost. PAT up 20.9% YoY to `312 mn (2.3% above estimates)...

One-offs impact performance, but order inflow gains traction Ahluwalia Contracts (India) Ltd (ACIL), for Q1FY19, reported muted numbers, mainly on the back of one-offs. Revenue declined by ~20% YoY to 404 crore, on the back of slow execution in few projects (impact of 35 crore Delhi CPWD project tree cutting issue, and NBCC Kolkata design issue). EBITDA declined by 2% to 53 crore. Lower raw material cost (down 1,099bps to 43.5% of Q1FY19 sales) was partly offset by higher employee cost (up 258bps to 8.9%) and other expenses (up 603 bps to 34.6%) leading to EBITDA margin expansion of 238bps to...