Dilip Buildcon Ltd. share price target

DBL received appointed date for five HAM projects and expects to receive the remaining seven projects in H1FY20. Total order book remain strong at Rs21,172cr which is 2.3x FY19 revenue while mobilization advance is required to de-leverage increasing debt. We reduce the valuation multiple for EPC business to 10x P/E (13x earlier) to factor delayed execution & high debt and HAM business at 1x P/B of invested equity with a TP of Rs681 and due to recent...

Dilip Buildcon Ltd (DBL) has reported weak numbers for 4QFY19 with revenue flat YoY and PAT up only 1.2% YoY. Delay in getting appointed dates for the HAM projects awarded earlier has resulted in weak revenue growth for the company. We as well as the management believe that it is temporary in nature and post the general election result, we expect appointed dates to come through along with new order inflows which augurs well for the industry as well as the company. EBITDA margin at 17.5% was down 100bps YoY on account of higher early completion bonus accrued last year. We have tweaked our FY20 and FY21 numbers marginally and continue to value DBL based on 10.0x FY21 EPS to arrive at...

Over the last 3yrs DBL has (1) Established itself as an astute execution machine; (2) Diversified segmentally & geographically; and (3) Undertook complex projects. While strong growth and diversification led to high capex intensity, large order booking followed high equity outgo on road HAM projects. Balance sheet is now choked and DBL needs to recapitalize the same. This can be achieved by equity fund raise/stake monetization in under construction HAMs. Capex cuts is short view, over long term will impede growth. Multiple re-rating is contingent on significant deleveraging over the next 2yrs. We maintain BUY with a cautious approach on debt built up. We maintain BUY on DBL, with a reduced TP of Rs 737/sh (vs. Rs 833/sh earlier). We have cut our target EPC multiple from 13.5x to 12x to factor in the high debt, delay in receiving appointed dates for 32% of order book & limited visibility of monetization of under construction HAM projects.

Delayed appointed dates for HAM projects mar revenue growth Dilip Buildcon (DBL) reported below-expected Q4FY19 revenue at Rs 25.7bn, flat YoY, due to execution constraints led by delays in award of appointed dates for HAM projects. EBITDA margins declined 100bps YoY to 17.5%, in line with our estimate. EBITDA dipped 4.9% YoY and adj. PAT fell 7.3% to Rs 2.2bn, but was above estimates due to higher other income and a lower effective tax rate. The Mar'19 order backlog stood at Rs 212bn, 2.3x FY19 revenue. We trim...

We attended Dilip Buildcon's analyst meet in Goa and visited the under construction site at Zuari bridge & Goa airport on 5th/6th April 2019. Execution of both projects are in high gear and expected to complete Zuari bridge by October 2020. Whereas,...

View: Sharp rise in stock price compels to downgrade to Accumulate We maintain our revenue, EBITDA margins and Adj. PAT estimates for FY19E, FY20E and FY21E as DBL maintains its Q3FY19 guidance. We will revisit our estimates post Q4FY19 results. However, we expect reduction in revenue visibility (order book to TTM revenue) from 2.5x (Q3FY19) to ~1.6x (Q2FY20E) will become a concern considering no order inflow during 1HFY20E. Currently, we expect DBL's revenue/ Adj. APT to grow at muted CAGR of 14.0%/ 15.8% over FY19-21E. The stock has rose sharply by more...

We maintain BUY with Rs 833/sh TP (13.5x FY21E EPS and BOT at 1x equity invested equity. With likely Rs 20bn advance receipt, debt may have peaked. We attended Dilip Buildcon Ltd. (DBL) Analyst Meet/Zuari Bridge Site Visit in Goa on 5th/6th April 2019. As per DBL this is the 2nd largest Cable Suspension bridge being built in India. This is a MORTH funded project with total length of 13.6km including an elevated road of 8km and a cable suspension bridge on Zuari River of 640m length

DBLs EPC order book as on Q3FY19 stands at Rs23,100cr ie, 2.5 times of trailing twelve-month revenue. In 9MFY19, the company has bagged fresh orders of Rs6,769cr and is expecting Rs3,000cr to Rs4,000cr of order inflow in Q4FY19, providing revenue visibility for the coming years. Roads, highways & bridges constitute more than 92% of their order book and rest comprises of mining, irrigation & urban development. The order book has grown at a CAGR of 45% over FY12-18 on account of continued government focus on the sector. With growing...

We maintain BUY with reduced TP of Rs 833/sh (13.5x Dec-20E EPS and BOT at 1x equity invested). DBL posted strong 3QFY19 Rev/EBITDA/APAT of Rs 24.9/4.4/2.1bn (+6/7/14% beat) despite only ~Rs. 100bn of the order book effectively being under execution. EBIDTA margins came in line at 17.7%. With 80-IA projects still contributing significantly, DBL reported a 6% effective tax rate.

Weak quarter, focus shifting from revenue growth to reducing leverage DBL's standalone revenue up 2.7% YoY to `16.2 bn in Q2FY19 (16.7% below estimates) due to slower execution run rate in road (+4% YoY) segment affected by monsoon. EBITDA margin down 70 bps YoY to 17.3% (66 bps below estimates), primarily due to higher other expenses and employee costs which was partially offset by fall in raw material costs by 64 bps to 76.8% of revenue. Reported PAT decreased 28.0% YoY to `832 mn due to poor operating performance coupled with higher tax rate of 12.8% vs....