Buy Dilip Buildcon; target of Rs 585 HDFC Securities

HDFC Securities research report on Dilip Buildcon

Dilip Buildcon (DBL) reported 2QFY21 APAT at Rs 473mn (-18%/+41% YoY/QoQ), 163% ahead of our estimate. The beat was driven by 7.6% revenue outperformance, better gross margins and lower interest cost. CFO during the quarter was Rs 2.8bn, which was utilised toward CFI (Rs 1.2bn) and CFF (Rs 1.5bn). NWC days decreased to 101 days from 114 days at 1QFY21 end despite QoQ revenue growth of 1.8%. Net D/E also improved from 0.92x in Jun-20 to 0.9x in Sep-20.

Outlook

We maintain BUY on DBL, with a target price of Rs 585/sh, given its (1) diversified and robust order book of Rs 256bn and (2) continued focus on asset recycling. We have valued EPC business at 10x Sep-22E EPS and HAM projects at 1x P/BV of invested equity.

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