Comments
AnandRathi
Ahluwalia Contracts (Buy)
CMP: ₹328
Target: ₹392
Key takeaways:
a) Strong FY19 inflows of about ₹4,700 crore (the best in any given year) far exceed the management’s revised FY19 inflow guidance of about ₹3,900-4,000 crore. With L1 status for about ₹200 crore, about ₹700 crore of bids not-yet-opened and a healthy about ₹4,300 crore bid pipeline, the opportunity landscape is bright to say the least. Management expects to acquire orders of about ₹2,000 crore in FY20.
b) Management has given a about 15 per cent revenue growth guidance for FY20, slightly lower from the earlier 15-20 per cent, but also states that the guidance has potential. The about 13.5 per cent margin guidance continues for the core construction business. The company expects to incur a about ₹40 lakh capex in FY20.
c) Management said strong year-to-date inflows have yielded an augmented OB of about ₹6,000 crore, providing ample assurance of about 3.5x FY19 revenues. While the backlog consists of a couple of slow-moving orders (about ₹850 crore), barring these the backlog is more than capable of delivering the company’s targeted growth.
Valuation: Factoring in the delays in timelines for the Charbagh railway re-development and the Kolkata-seater-extension projects, we lower our estimates. We also factor in the real-estate-inventory liquidation at below book value.
Risk: Any slower-than-expected project execution.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.