Anand Rathi 's research report on Dilip Buildcon
Covid-19 made Dilip Buildcon not only miss its year-end execution spurt, but order additions too were pushed to the future. Nevertheless, debt shrinking for a fifth straight quarter was heartening, and continued early completion of projects reinstates faith in its execution capabilities. With the Covid-19 situation yet evolving, it refrained from “guidance”, but talked of execution returning to normal sooner than later. A lighter balance sheet augurs well, but the OB would need to be attended to. Here, the recent reduced dependence on a single segment (roads) would help. Proven execution capabilities, a lighter balance sheet (efforts continuing) and attractive valuations make us retain our Buy rating.
Outlook
Adjusting for the Covid-impact, we slash FY21e earnings ~47% (~37% for FY22; changed tax assumption). At the CMP, the stock (excl. investments) quotes at a PER of 6.5x FY22e, against the TP implied 8x.
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