Buy Dilip Buildcon, target price Rs 400: HDFC Securities

HDFC Securities has buy call on Dilip Buildcon with a target price of Rs 400. The current market price of Dilip Buildcon Ltd. is Rs 228. Time period given by analyst is one year when Dilip Buildcon Ltd. price can reach defined target.

Dilip Buildcon Ltd., incorporated in the year 2006, is a Mid Cap company (having a market cap of Rs 3449.94 Crore) operating in Construction sector.

Dilip Buildcon Ltd. key Products/Revenue Segments include Contract Revenue and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 2668.90 Crore, up 18.15 % from last quarter Total Income of Rs 2258.94 Crore and down -15.10 % from last year same quarter Total Income of Rs 3143.48 Crore. Company reported net profit after tax of Rs -41.10 Crore in latest quarter.

Investment Rationale
Dilip Buildcon (DBL) reported revenue/EBITDA/PAT at INR 25/2.4/0.03bn—a miss on revenue/EBITDA, while PAT was in line with our estimate. EBITDA margin, at 9.5%, continues to remain under pressure on account of higher raw material prices/time and cost overruns on legacy projects (impacted by COVID-19 delays). These projects will get completed by Q2FY23. The standalone net debt reduced by INR 4.1bn to INR 27.4bn, helped by INR 4.5bn of inflow from the Shrem InvIT deal. DBL further plans to reduce standalone debt by INR 3-4bn in FY23, aided by part monetisation/securitisation of InVIT units, which are expected to be issued in Jul- 22, after the transfer of five completed projects to the platform. THe brokerage has cut estimates to factor in higher commodities prices. It maintains BUY, with a reduced SOTP of INR 400 (12x Mar-24E EPS, 0.85x P/BV HAM equity investment).

Promoter/FII Holdings
Promoters held 70.15 per cent stake in the company as of 31-Mar-2022, while FIIs owned 7.77 per cent, DIIs 9.11 per cent.