Dilip Buildcon Ltd. share price target

Owing to increase in debt we have ascribed a 25% P/E valuation discount and value EPC business at 13.5x, we maintain BUY with reduced TP of Rs 817/sh (13.5x FY20E EPS and BOT at 1x equity invested). DBL delivered muted execution of Rs 16.3bn (2% miss). EBIDTA Margin was in line with guidance at 17.3%. APAT at Rs 832mn was 37% below estimates owing to higher depreciation/interest/tax rate.

DBL received order inflows of 20 projects in FY18 of which 12 are road HAM, 7 are road EPC and 1 in urban development leading to orderbook of `240.9 bn providing revenue visibility of 2.8x TTM revenue. In the current scenario where, weak balance sheet-companies are facing difficulties for financial closure, DBL has proved its excellence by completing financial closures for 3 HAM projects and expects other 9 to be completed within scheduled time....

DBL results for the quarter were ahead of our estimates led by better than expected execution and margins. Better than expected order inflow during FY18 and a robust order book provides healthy visibility of future earnings...

We maintain BUY with a TP of Rs 1,434/sh (10x FY20E EV/EBITDA and BOT at 1x equity invested). DBL delivered strong execution with 1QFY19 revenue beat of 3.7%. Revenue for 1QFY19 came in at Rs 24.4bn. Margins continued to be higher than industry at 17.8%. APAT at Rs 2.5bn was 30.9% above our estimates on account of deferred tax reversal impact of Rs 173mn. Adjusted for deferred tax APAT was 22.0% above estimates. There was no early completion bonus in 1QFY19.

In last few days Dilip Buildcon stock has corrected by more than 25%. There have been some concerns raised by investors.

We maintain BUY with a TP of Rs 1,434/sh (10x FY20E EV/EBITDA and BOT at 1x equity invested) DBL continued to deliver strong execution with 4QFY18 Revenue beat of 15.3%. Revenue for FY18 came in at Rs 77.5bn. DBL has consistently demonstrated industry beating 18.1% EBITDA margins in FY18. Despite a muted 9MFY18, ~Rs 141.1bn (EPC portion) of orders were bagged in FY18 as NHAI tendering picked up pace in 4QFY18.

DBL with its differentiated business model that lays on project selection and execution with operational efficiency continues to remain one of the prime beneficiaries of Govt's Bharatmala project (` 6.95tn). With its presence across 13 states of India (as on Mar'18) and signing of an agreement with Shrem Group (Aug'17) to exit 100% from its 24 BoT projects for ` 16bn,...

Dilip Buildcon Limited (DBL) is an India-based company engaged in the business of infrastructure facilities on engineering procurement and construction (EPC) basis. The Company undertakes contracts from various government and other parties and special purpose vehicles promoted by the Company. It operates through construction and engineering contracts segment...

Dilip Buildcon's (DBL) Q3FY18 sales grew 40% YoY to Rs 19.4 bn, ahead of our estimate of Rs 18.1 bn and consensus estimate of Rs 17.7 bn. EBITDA was up 24% YoY at Rs 3.4 bn and 6% above our estimate. EBITDA margin was down ~230 bps YoY at 17.7%.

PAT +52% YoY; working capital pressures creep in DBL's 3QFY18 net profit grew 52% YoY to INR 1.65bn driven by 40% revenue growth from better execution of OB base. Although interest cost has remained flat QoQ, the benefit of refinancing INR 6bn of debt through cheaper NCDs will be evident in 4QFY18. However, net debt increased to INR 29bn at 9MFY18 (vs. INR 24bn in 1HFY18) on pending receivables of c. INR 8bn from a) GST receipts from customers and b) delays in receiving mobilisation advances as announcement of project appointed dates got postponed. The OB fell from INR 175bn (3.5x FY17 sales) in Mar'17 to INR 123bn (2.4x FY17 sales), as NHAI ordering remained...