Ahluwalia Contracts (India) Ltd. share price target

ACIL's reported top-line stood at Rs3.05bn (+16% yoy) mainly owing to healthy order inflow over last 2 years (added aggregate orders worth >Rs35bn in FY15 & FY16) and improved macro scenario. Further, its operating profit grew strongly by 33% yoy to Rs424mn, while EBITDA margin stood robust at 13.9%. Net profit grew by ~14% yoy...

Q1FY17 Revenue/EBITDA of Rs 3.06bn/Rs 429 mn were lower than estimates. However, EBITDA margin at 14% (+160 bps YoY) was better than estimate. The strong revenue growth of 16% YoY was primarily led by stable execution by the company in its key projects. Net profit at Rs 215 mn (+14.5% YoY) was also lower than estimates due to lower operating profit. Going ahead, the strong order book (Rs 37.6bn, 3x FY16 sales) at present with more inflows expected going ahead, sustainability of margins and improvement in return ratios to augur well for the company. However, current valuation at 14.5x P/E on FY18 earnings looks fair and factors in most of the positives. We downgrade our rating on Ahluwalia to Hold (from Buy).

Ahluwalia Contracts (ACIL) continued to report healthy numbers with its topline witnessing ~22% yoy growth to Rs3.8bn. Operating profit exhibited a robust ~89% yoy growth to Rs526mn vis--vis our expectation of Rs478mn on the back of healthy order inflow (Rs19.5bn in FY15 and Rs15.3bn in FY16) and sound execution. EBITDA margin stood at 13.7% (+485 bps yoy & +142bps qoq) for the quarter. Net profit grew by ~53% yoy to Rs267mn. We maintain our positive view on the stock, as we believe that ACIL is well-poised to witness a healthy traction in the backdrop of healthy order book, sound return ratios, strengthening balancesheet amid positive indications on macroeconomic front. Current order backlog...

Ahluwalia Contracts (ACIL) continued to report healthy numbers, which have broadly been in-line with estimates. Top-line witnessed a growth of ~20% yoy to Rs3.2bn. Operating profit exhibited a growth of ~60% yoy to Rs394mn as against the expectation of Rs397mn. Healthy order inflow and sound execution led to better operating profit. EBITDA margin stood at 12.3% (+ 309 bps yoy). Net profit grew by ~46% yoy to Rs198mn. We maintain our positive view on the stock as ACIL is well poised to witness a healthy traction in the backdrop of healthy order book, sound return ratios, strengthening balance-sheet and stable macroeconomic scenario....

Buy Ahluwalia Contracts (India) Ltd CMP at Rs. 256 and add on dips to Rs. 220.5-235band. Price Targets at Rs. 294 & Rs. 323.5

ACIL posted 11% YoY growth (highest Q1 growth in last 3 years) in Q1FY16 standalone sales to Rs2.7 bn, 11.9% lower than our expectations. The growth in sales was driven by better execution in its key business segments and projects. However, EBITDA margin declined by 133bps to 12.4% (88bps above our expectation), due to higher sub-contract cost (which as a percentage of sales increased to 21.8% vs 13% in Q1FY15).

With successful turnaround during Q3FY14-Q3FY15, commonwealth games overhang becoming a non-issue; Ahluwalia Contracts (India) Ltd (ACIL) is focusing to grow its order book towards Government (Govt.) projects and escalation clauses. Further, ACIL is set to benefit from Govt.'s increased thrust on infrastructure. We initiate coverage on ACIL with a BUY rating on account of increased order inflows, better revenue visibility, improvement in EBITDA margin and superior return ratios.