Maintain BUY on Dilip Buildcon Ltd - Strong performance - HDFC Securities

Mr. Parikshit D Kandpal, CFA, HDFC Securities and Mr. Chintan Parikh, Institutional Research Analyst, HDFC Securities

Dilip Buildcon (DBL) reported revenue/adj.EBITDA/APAT at INR 29.2/5.1/1.6bn, 9/21/29% ahead of our estimates on execution and margin out- performance. FY21 saw record order inflow of INR 220bn, taking the order book (OB) to INR 274bn. Working capital rose to 127 days from 120 days in Mar-20. Standalone net debt reduced INR 3bn to INR 31bn sequentially and is expected to reduce by at least INR 5bn on the back of QIP proceeds in FY22. DBL has guided for 10-15% topline growth and INR 100-120 order inflow for FY22. We maintain BUY, with an unchanged target price of INR 640/sh, given its (1) diversified and robust OB (~3x FY21 revenue) and (2) continued focus on asset recycling. We have cut our FY22/FY23 EPS estimates by 7.5/1.2% to account for the impact of lockdown, higher commodity prices, and QIP.

Beat on all fronts: Revenue grew by 19/19% YoY/QoQ to INR 29.2bn. Other expenses during the quarter included INR 450mn CSR expense of prior periods and provisions of INR 100mn. Adjusting for these, EBITDA came in at INR 5.1bn (37/26% YoY/QoQ). Margins expanded 233/98bps YoY/QoQ. Consequently, APAT came in at INR 1.6bn (48/47% YoY/QoQ), 29% beat on estimate. While labour availability has fallen to 65-70%, management is confident of 10-15% topline growth. Margin could see weakness due to higher commodity prices.

INR 100-120bn inflow guidance for FY22: Order wins of INR 69bn during 4QFY21 took FY21 inflow to record INR 220bn. DBL has successfully diversified its OB over the past few years as roads contribute only 52% in outstanding work, compared to 87% at FY18-end. With closing order book at INR 274bn, DBL provides earnings visibility for three years on FY21 revenue. With qualifications across segments, DBL is targeting INR 100- 120bn orders in FY22.

Proceeds from Cube deal and QIP to lead de-leveraging: Standalone net debt reduced to INR 31bn (INR 34bn on Dec-20), with net D/E at 0.79x. Working capital increased to 127 days from 120 days on Mar-20. DBL expects net debt to reduce by at least INR 5bn on the back of the Cube deal and QIP proceeds. Cube deal for monetisation of the seven HAM assets is expected to close in 1-2 months.

Shares of Dilip Buildcon Ltd was last trading in BSE at Rs.544 as compared to the previous close of Rs. 538.75. The total number of shares traded during the day was 12122 in over 825 trades.

The stock hit an intraday high of Rs. 548 and intraday low of 538.75. The net turnover during the day was Rs. 6581859.

Source : Equity Bulls

Keywords