Initiating Coverage: Dilip Buildcon Ltd - BUY - TP Rs.1217 - Kotak

- Dilip Buildcon Limited (DBL) is one of the leading private sector road-focused Engineering Procurement Construction (EPC) contractors in the country. With a strong order book providing a revenue visibility of next 2.5 years, company is all set to bag the upcoming road awards with its superior balance sheet strength. Post divestment of its road assets, DBL has transformed itself into a complete EPC player. Execution pace ahead of industry peers, strong margins coupled with lower debt and refinancing of interest rates are likely to be the key drivers for the stock.

- Stock is currently trading at 16.5x/15.3x P/E on FY19/20 estimates and we recommend BUY on the stock with a price target of Rs.1217 based on 20x FY20 earnings. We believe that the momentum in the stock is going to be maintained going forward too led by order inflow announcements, rating upgrades as well as refinancing of interest rates. Key risk to our recommendation would come from lower than expected order inflow or slower rate of execution.

Shares of Dilip Buildcon Ltd was last trading in BSE at Rs.928.9 as compared to the previous close of Rs. 915.95. The total number of shares traded during the day was 19369 in over 797 trades.

The stock hit an intraday high of Rs. 935.25 and intraday low of 912.2. The net turnover during the day was Rs. 17972472.

Source : Equity Bulls

Keywords