HDFC Securities' research report on Dilip Buildcon
Dilip Buildcon (DBL) reported 1QFY21 APAT at Rs 336mn (73%/71% YoY/QoQ), marginally behind our estimate, as revenue declined by 16%/23% YoY/QoQ. However, execution was 9% ahead of our estimate as labour availability improved to 90%. CFO during the quarter was negative at Rs 2bn as NWC days increased to 114 days from 93 days at FY20 end. Net D/E also increased from 0.8x on Mar-20 to 0.92x on Jun-20. Nonetheless, despite muted ordering in the sector, the company has won orders of Rs 107bn till date in FY21.
Outlook
We maintain BUY on DBL, with a target price of Rs 466/sh, given its (1) strong and diversified order book of Rs 261bn and (2) continued focus on asset recycling. We have valued EPC business at 8x FY22E EPS and HAM at 1x P/BV.
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