Ahluwalia Contracts (India) Ltd. share price target

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...

Growth Path Remains Intact Despite Soft Performance; Maintain BUY Ahluwalia Contracts (ACIL) has reported a soft performance in 1QFY19. Led by slow execution in new projects, ACIL's revenue declined by 20% YoY (-10% YoY GST adjusted) to Rs4bn vs. our estimate of Rs4.2bn. Further, EBITDA declined by 2% YoY and 1.5% QoQ to Rs526mn, while EBITDA margin improved by 238bps YoY and 107bps QoQ to 13%. Net profit stood at Rs282mn (-4.5% YoY and -9% QoQ). ACIL received order inflow of Rs20bn in FY19 YTD taking its total order backlog to Rs47bn (2.9x FY18 revenue). Upgrading order inflow guidance to Rs24bn from Rs20bn, the Management has maintained revenue growth guidance of 20% with EBITDA...

We maintain BUY with a SOTP of Rs 489/sh (EPC segment at 476sh (EPC segment at 10x Mar-20E EV/EBITDA, Kota BOT 1x P/BV). AHLU 1QFY19 net revenue at Rs 4.0bn was 3.5% below our estimates (Rs 200mn miss in CPWD redevelopment project in Delhi tree felling issue and Rs 150mn in West Bengal NBCC project redesigning). EBITDA at Rs 0.5bn was 1.6% below estimates. EBIDTA margins expanded 238bps YoY to 13.0%.

We maintain BUY with a SOTP of Rs 486/sh (EPC segment at 486/sh (EPC segment at 10x Mar-20E EV/EBITDA, Kota BOT 1x P/BV). AHLU 4QFY18 net revenue came in at Rs 4.5bn (-5.3%YoY, +23.7%QoQ) which was only marginally below our estimates. Company delivered strong 13.3% EBITDA margins in FY18 (vs. 12.2% YoY). This has been achieved by mix of better cost control and improvement in labour market supply.

Soft Performance; Higher Order Inflow to Drive Growth Ahluwalia Contracts (ACIL) has reported a soft performance in 4QFY18, as its reported revenue declined by 5% YoY to Rs4.5bn. While EBITDA grew by 25% YoY to Rs534mn, it declined by ~15% QoQ. Though EBITDA margin expanded by 286bps YoY to 11.9%, it declined by 535bps QoQ owing to execution of low margin works during the quarter. Net profit increased by 54% YoY and 6% QoQ to Rs310mn mainly aided by lower interest cost. ACIL secured orders worth Rs13bn in FY18. It expects order inflow to the tune of Rs20-22bn in FY19E. Notably, it has already received orders worth Rs16.2bn in 1QFY19 YTD taking its total order book to Rs47bn (2.9x of FY18...

Good quarter, order book execution key to growth Ahluwalia Contracts (India) Ltd (ACIL), for Q3FY18, reported decent numbers. Revenue grew by ~1% YoY to 361 crore, growth was muted on the back of GST impact (adjusting for the same, revenue would have been up by 9-10%). Execution of better margin orders led to EBITDA margin expansion of 413bps to 17.3%. Good operational performance aided net profit growth of 20% to 29 crore. As of 31 Dec'17 debt was at 61 crore (vs 63 crore as of 30 Sept'17). Management Guidance: For FY18, the management has maintained revenue...

Healthy Show on Higher Margin: Maintain BUY Ahluwalia Contracts (ACIL) has reported a better-than-expected operating performance in 3QFY18, with its reported EBITDA growing sharply by 32% YoY and 25% QoQ to Rs625mn mainly on account of continued belt-tightening exercise and a good progress on high-margin projects. While reported revenue rose by just 1% YoY to Rs3.6bn, revenue on comparable basis grew by ~10% YoY. EBITDA margin rose by 411bps YoY and 240bps QoQ to 17.3%, which is the key positive, in our view. Despite a one-time provisioning of Rs87mn in finance cost, reported net profit surged by 19% YoY and 13% QoQ to Rs292mn owing to higher operating profit. Further,...