HDFC Securities' research report on ITD Cementation
While ITD saw robust execution (Rs 7.9bn, +12%/+43% YoY/QoQ, 13% beat), margins have still not normalised to pre-COVID levels (9%, -9/+922 bps YoY/QoQ, vs 10.8% HSIE est.). Labour availability has fully normalised. Order backlog is robust at Rs 130bn (4.5x FY20 revenue), aided by FYTD21 order wins of Rs ~40bn. Although consolidated net debt (Rs 4.4bn vs Rs 3.4bn at 2QFY21) has increased QoQ, the balance sheet remains robust at 0.4x net D/E, as cash utilisation has gone up.
Outlook
We maintain BUY on ITD with an unchanged target price of Rs 106/sh, (1) given large order book (~4.5x FY20 revenue), (2) strong balance sheet and (3) supportive valuation (6.1x FY23E EPS). No change in our financial estimates.
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