Hold Dredging Corporation of India; target of Rs 360: ICICI Direct

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ICICI Direct's research report on Dredging Corporation of India

Dredging Corporation of India reported strong revenues for Q1FY20 led by higher revenues from dredging contract in Bangladesh. Further EBITDA margins came at ~16% levels, led by higher other expenses to sales ratio, mainly due to lower margins from the Bangladesh contract (due to sub-contracting). Subsequently, the absolute EBITDA and PAT de-grew 5% and 71% respectively due to the lower operational performance and higher depreciation expenses. Going forward, the management expects the cash inflow from SCI in Q4FY19 and its newer promoter structure to be beneficial for its working capital days going ahead.

Outlook

However, as concerns remain related to execution of ongoing projects and scaling up of the operations of the company by the consortium of the ports, we maintain HOLD on the stock, valuing it at Rs 360 (15x FY21E EPS).

For all recommendations report, click here

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