Dilip Buildcon - Q1FY21 - Result Update - YES Securities

ADD (Target Rs391, Upside 11.4%)

Dilip Buildcon Ltd (DBL) delivered decent topline performance during Q1 FY21 with standalone revenues at Rs.18.9 bn (-17.5% yoy). This was despite the severe impact of COVID-19 related shutdown. The slower execution with continued fixed costs saw operating margin reduce to 15.9% (-235 bps yoy). Higher depreciation and finance costs led to 73% decline in PAT. The company received ~Rs.107bn worth of projects during YTD FY21, and order book currently stands at Rs.261 bn. Net debt increased during the quarter by ~Rs.4bn on qoq basis. DBL also saw a rise in working capital. The Company expects the working capital to normalize as COVID situation normalizes. The Company is in talks with a Global Investor to sell stake in 7 HAM projects. The deal is likely to get finalized by FY21-end.

With execution picking up, some part of the revenues lost during Q1 FY21 would be covered up during H2 FY21. Overall, we expect DBL to end FY21 with marginal revenue decline. Operating margin is likely to move back towards ~17% levels in coming quarters. The effective tax rate is expected to be at 30-32% levels during FY21. We believe the Company is well placed to deliver robust growth in H2 FY21 and FY22 with decent order book in hand and labor availability now back to 90% of normalized levels. We maintain our ADD rating on the stock for target of Rs.391 (based on SOTP valuation).

Shares of Dilip Buildcon Ltd was last trading in BSE at Rs.373.25 as compared to the previous close of Rs. 350.55. The total number of shares traded during the day was 52898 in over 2398 trades.

The stock hit an intraday high of Rs. 376.3 and intraday low of 349.75. The net turnover during the day was Rs. 19014443.

Source : Equity Bulls

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