Buy Dilip Buildcon; target of Rs 1261: Dolat Capital
Dolat Capital’s research report on Dilip Buildcon
DBL’s standalone revenue grew sharply by 72.6% YoY to `15.8bn in Q2FY18 (37.2% above estimates) due to better execution run rate in Road and Mining segments. EBITDA margin expanded 107 bps YoY to 18.0% (in line with estimates) primarily due to better operating efficiency. Adj. PAT grew sharply by 12.6x YoY to `881mn due to stellar operating performance coupled with lower tax rate which stood at (5.3%) vs. nil. We reiterate Buy on the stock due to its differentiated business model, proven execution capability, growth trajectory coupled with improving financials.
We expect DBL to witness traction in order inflow and revenue, best EBITDA margin among peers, superior net profit margin, comfortable working capital, robust order inflow and order book, robust FCFF, declining leverage, and improving healthy return ratios (RoE/ RoCE of 25.1%/ 29.9% by FY20E) over FY17-20E. Thus, we reiterate Buy on the stock with an upward revised SOTP of `1,261 (Exhibit 1).
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