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Epic Research
Dilip Buildcon (Buy)
CMP: ₹417.65
Target: ₹470
Dilip Buildcon is an India-based company engaged in the business of infrastructure facilities on engineering procurement and construction (EPC) basis.
Entered into agreement(s) with Cube Highways and Infrastructure III Pte Ltd (’Cube’) Singapore for sale of five under construction Hybrid Annuity Model (’HAM’) projects on August 31, 2019. The net order book as on September 30 stands at ₹20,292.6 crore, 62.65 per cent of the order book is constituted by roads and highways project Special bridge projects contribute 5 per cent, mining contributes 21.37 per cent, irrigation projects contribute 6.91 per cent, metro projects contribute 2.04 per cent, tunnel projects contribute 1.91 per cent and airport projects contribute 0.11 per cent.
Valuation: Share is currently quoting at the lower side of our valuation multiples and an attractive investment opportunity. Currently, stock is trading around 1.2x of FY20E BV and 8.3x of FY21E which is less as compared to peers. Dilip Buildcon is also a high beta stock that performs better than the market in a bullish scenario. We recommend buying stock with a target price of ₹470 valuing stock at 10x of FY21 earnings and 1.4x of FY21E BV.
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