Dilip Buildcon surges 10% on receiving LoA for project worth Rs 1,335 cr

The project's completion period is 50 months

Shares of Dilip Buildcon surged 10 per cent to Rs 418.05 on the BSE on Wednesday after the company announced that its Joint Venture with Hindustan Construction Company (HCC) has received a letter of acceprtance (LoA) from Rail Vikas Nigam Limited for a new project worth Rs 1,334.95 crore in Uttarakhand.

"HCC-DBL has received letter of acceptance (LOA) for a new Project viz Constructlon of Tunnels, Bridges, Yard and formation works from chainage 117+365 To 125+320 (FLS) under Package-9 in connection with new BG Line between Rishikesh and Karanprayag (125km) in State of Uttarakhand, India," the company said in an exchange filing.

"This is an item rate contract for construction of 8.04 km long rail line involving 6.4 km long main tunnel and 6.3 km long escape tunnel, 2 major bridges and one minor bridge, 2.2 km long yard and a station at Karanprayag. The work is to be completed in 50 months," HCC said in a separate exchange filing.
 

It comprises of 17 tunnels, 16 Major Railway bridges and 12 new stations. The rail line will connect to the new trade centres and will pass through many famous places connecting Devprayag, Srinagar, Rudraprayag, Gauchar, Karnprayag, Dehradun, Tehri Garhwal, Pauri Garhwal, Rudraprayag and Chamoli, the filing said.

At 1:15  PM, Dilip Buildcon's stock was trading 8.4 per cent higher at Rs 412.30 as compared to 0.5 per cent gain in the S&P BSE Sensex. Around 12.2 lakh shares have changed hands on the NSE and BSE, combined, so far

Earlier, on July 23, the DBL-HCC JV had received the letter of acceptance (LoA) from the Narmada, Water Resources, Water Supply and Kalpasar Department (Water Resources) for an Engineering, Procurement and Construction (EPC) project in the state of Gujarat.

In June quarter of 2020-21 (Q1FY21), Dilip Buildcon's net profit declined by 49.67 per cent on a year-on year (YoY) basis to Rs 50.47 crore while consolidated net revenue stood at Rs 2,099.94 crore, down 13.81 per cent YoY.

On the operational front, the company's earnings before interest, tax, depreciation, and ammortisation (Ebitda) stood at Rs 461.12 crore during the quarter while Ebitda margin came in at 21.96 per cent.

After the results announcement, Anand Rathi said that proven execution capabilities and ample revenue assurance hold good for the company but the stock itself had limited potential.

"Dilip’s on-roll workforce meant site mobilisation was quick and the recovery curve for execution efficiency is being further aided by access to owned equipment bank. These and the recent strong order addition raise hopes of a better time, but a surge in net debt proved to be a hitch. This was considered a short-term blip (procedural delays with payments), and efforts are underway to check any expansion in the balance sheet (assets on the block)...We alter our target price from Rs 368 to Rs 369," it said.

HDFC Securities said, "Despite muted ordering in the sector, the company has won orders of Rs 107bn till date in FY21. We maintain BUY on DBL, with a target price of Rs 466/sh, given its strong and diversified order book of Rs 26,100 crore and continued focus on asset recycling. We have valued EPC business at 8x FY22E EPS and HAM at 1x P/BV," it said.