Dilip Buildcon nears record high on strong order inflow

Shares of Dilip Buildcon moved up by 7% to Rs 1,030 on the BSE in noon deal, extending its 2% gain in past three trading sessions, after winning projects worth of about Rs 75.36 billion from the National Highways Authority of India (NHAI). The stock is trading close to its record high of Rs 1,059 touched on December 27, 2017 in intra-day trade.

Highways builder Dilip Buildcon on February 28 and March 1, announced that it has received letters of awards (LOA) worth of Rs 64.9 billion from the NHAI.

The company received LOA by the NHAI for two new hybrid annuity projects valued at Rs 44.73 billion in the state of Karnataka and Rs 20.13 billion in the state of Andhra Pradesh. The company also received LOA for two new EPC project valued at Rs 6.70 billion and Rs 3.8 billion in the state of Uttar Pradesh and Karnataka respectively.

Dilip Buildcon said it has also declared L-1 bidder by the NHAI for three new hybrid annuity projects valued at Rs 53.90 billion in the State of Karnataka and Jharkhand respectively.

The stock has outperformed the market by gaining 27% in past one month as compared to 1% decline in the S&P BSE Sensex.

The company had reported a strong 52% year on year (YoY) growth in its net profit at Rs 1.65 billion, on back of 40% YoY jumped in revenue at Rs 19.48 billion in December quarter (Q3FY18). Due to high other expenses, EBITDA (earnings before interest, tax, depreciation and amortised expenses) margin came under pressure by 213 bps YoY to 18.04% in Q3FY18.

Analyst Edelweiss Broking reiterates ‘buy’ recommendation on the stock with target price of Rs 1,204.

“Based on strong track record and 55% growth reported in first nine months, we are revising our FY18E topline expectations to Rs 72.40 billion (42% growth YoY) against Rs 69.26 billion expected earlier. We believe, Dilip Buildcon is best placed to capture growth in construction expenditure both by central and state governments,” the brokerage firm said in Q3FY18 result update.

“We expect Dilip Buildcon to witness traction in order inflow and revenue, best EBITDA margin among peers, superior net profit margin, comfortable working capital, robust order inflow and order book, robust free cash flow for the firm (FCFF), declining leverage, and improving healthy return ratios (RoE/ RoCE of 24.9%/ 27.6% by FY20E) over FY17-20E,” analysts at Dolat Capital Market said in a report. The brokerage firm reiterates Buy on the stock with an upward revised SOTP of Rs 1,261.

At 01:36 pm; the stock was trading 5% higher at Rs 1,011 on the BSE, against 0.31% rise in the Sensex. The trading volumes on the counter more than doubled with a combined 876,771 shares changed hands on the BSE and NSE so far.