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Research
BUY ITD Cementation: AnandRathi Institutional Research
Posted On : 2016-03-06 21:30:03( TIMEZONE : IST )
ITD Cementation, India - Going strong, perfect turnaround; Buy with a target price of Rs 138
ITD Cementation posted a strong set of Q4 CY15/CY15 figures, aided by its excellent execution of the JNP Terminal project. We retain our Buy rating, with a price target of Rs. 138 based on 15x CY17e PE, backed by its strong operational capabilities, healthy order-backlog and L1 orders of Rs. 30bn likely to be converted in Q1 CY16.
Robust revenue performance. ITD Cementation delivered strong consolidated revenue performance of Rs. 10.6bn (up 106.8% yoy), the highest quarterly revenue it ever booked. For the full year CY15 growth shot up 78.7% yoy to Rs. 30.7bn, aided by the healthy contribution from the JNP Terminal project (~40%). We estimate a 16% CAGR in revenue over CY15-17, backed by its healthy order-backlog and strong bid pipeline.
Margins on the verge of improvement. The EBITDA margin for the quarter came at 6.2%, improving 215bps yoy (full year CY15: 6.2% vs. 5.3% in CY14). With fresh orders in high-growth, high-margin segments and slow-moving projects nearly complete, we expect the EBITDA margin to recover to 7.6% and 9.1% in the next two years.
Strong order book. The order book at end-Dec'15 was ~Rs. 52bn (1.7x TTM consol. revenue), providing strong revenue assurance over the next three years. Also, its L1 status for projects of ~Rs. 30bn, including the Mumbai Metro project worth Rs. 12bn is likely to be converted in Q1 CY16. Further, it has placed bids in several port, MRTS and industrial-structure segments and is looking to mass-housing opportunities, keeping the outlook upbeat.
Valuations. Revenue and PAT growth are likely to continue strong in FY17-18 owing to the strong order book and healthy inflows, with the larger projects beginning to contribute considerably to revenue. At the ruling price, the stock quotes at a PE of 10x CY17e. We retain our Buy rating, with a price target of Rs. 138 based on 15x CY17e PE. Risk: Project-execution delays.
Shares of ITD CEMENTATION INDIA LTD. was last trading in BSE at Rs.99.2 as compared to the previous close of Rs. 100.45. The total number of shares traded during the day was 16961 in over 294 trades.
The stock hit an intraday high of Rs. 102.45 and intraday low of 98.2. The net turnover during the day was Rs. 1704308.
