Dilip Buildcon Ltd. share price target

DBL has a strong execution engine which was impacted due to financial constraints owing to high equity outlay on HAM projects. This has been sorted out with Shrem and Cube Highways deal and likely closure of residual 7HAM projects monetization by 1QFY21. We believe that non roads share in the order book will de-risk growth concerns. Balance sheet healing augurs well for multiple re-rating. DBL is in talks with credit rating agencies for a possible rating review and has indicated 2QFY21E timeline for a possible outcome. We have cut down FY20/21E EPS estimates by 21.7/6.2% to factor in rev cut, high interest expense and taxes. We maintain BUY. Key risks (1) Further debt build-up; (2) Deterioration in NWC days and (3) Delay in balance 7 HAM monetization. We maintain BUY on DBL, with a reduced TP of Rs 681/sh (vs. Rs 717/sh earlier). We retain our target EPC multiple at 12x FY21E EPS to factor a marginal cut in FY20 revenue estimates. We have revised our FY20/21 EPS estimates lower by 21.7/6.2% respectively.

In 3QFY20, Dilip Buildcon Ltd (DBL) revenue declined by 4% YoY on account of delay in award of appointed date by NHAI and continuous rainfall until Nov-19. Management has lowered its FY20E revenue guidance by 5% to Rs95b. But we understand, despite the cut, revenue to increase by 40% YoY in 4QFY20. EBITDA margin in 3QFY20 was flat YoY at 17.6% and FY20E EBITDA margin is expected at 17-18%. DBL has received orders of Rs62b in YTDFY20 and has guided for incremental orders of Rs50-70b in 4QFY20. NHAI ordering has been weak and Rs800b worth of tender are open until today and DBL expected speedy award in the coming month. We maintain BUY rating on...

Dilip Buildcon's (DBL) Q3FY20 standalone revenue fell 4% YoY to Rs 23.8bn (Rs 25bn est.) due to the extended monsoon and delayed appointed dates.

DBL has established itself as strong executioner with a track record of securing early completion bonus for its projects, though it comes at a cost of inventory pile up and NWC stress in case of delays in Appointed Date. With all but one of its HAM projects awaiting AD, we expect an improvement in NWC situation. DBL has secured a deal for monetization of its HAM portfolio with Cube Highways, which may enable capital churning and help bid for new projects. We maintain BUY with a cautious approach on debt built up We maintain BUY on DBL, with a reduced TP of Rs 717/sh (vs. Rs 737/sh earlier). We retain our target EPC multiple at 12x FY21E EPS to factor a marginal cut in FY20 revenue estimates. We have revised our FY20/21 EPS estimates lower by 9.9/4.9% respectively.

Dilip Buildcon's (DBL) Q2FY20 standalone revenue was in line at Rs 18.1bn (+11% YoY), but PAT (31% YoY) missed estimates on higher depreciation and taxes.

Successful stake sale to Cube; another deal in the offing

Dilip Buildcon (DBL) has entered into a SPA with Cube Highways (Cube) for 100% stake sale in five under-construction NHAI HAM projects for a pre-tax equity consideration of ~Rs 7bn, against a total equity requirement of Rs 5.7bn.

While higher depreciation (39%YoY) and interest cost (31% YoY) because of Ind AS 116 and a higher tax rate of 22% (vs3% in Q1FY19) slid earnings growth by 51% YoY. DBL received appointed date for ten HAM projects and expects to receive the remaining two projects in coming months. Total OB remains strong at Rs19,029cr (2.2x TTM revenue) and expects an order inflow target of Rs120-150bn in FY20 due to a strong pipeline of Rs600bn in road segments....

Dilip Buildcon Ltd (DBL) has reported lower than expected results for 1QFY20 with 6% YoY decline in revenues and 4.2% YoY decline in EBITDA. The revenue and EBITDA were ahead of consensus numbers by 9% and 10% respectively, however, PAT at Rs1.25bn was much lower than expectations on account of higher interest and depreciation costs and higher tax rate. The management has maintained its guidance of 10-15% revenue growth for FY20 and expects 2H to be much better as the company has received appointed dates for 10 out of the total 12 HAM projects. We believe the company is on target to achieve its FY20 revenue targets and believe that EBITDA margins can surprise positively on account of higher early completion bonus. We...

Dilip Buildcon (DBL) reported below-expected Q1FY20 revenue at Rs 23bn, down 6% YoY, due to execution constraints from delays in award of appointed dates for HAM projects.