Target ₹492
CMP: ₹456.40
Dilip Buildcon (DBL) Q3FY24 (standalone) operational numbers (EBITDA) came in-line with our and consensus estimate. PAT was boosted by one off gains. After weak Q1-FY24, DBL has reported revenue increase of 7 to 8 per cent y-o-y and we expect it to close FY24E with revenue increase of 5 per cent y-o-y.
Debt has been reducing, which is positive but need to watch for debt level as DBL aim to have asset ownership business in long term. PE Alpha Alternative deal is on track to get investment of ₹ 650 crore pa in FY24 and FY25 and is major avenue to reduce debt. Order win was nil in Q3FY24 and given election code of conduct, inflow could move to FY25.
For DBL, short term business will be construction business (EPC Contracts) and long term business will be asset ownership business (Coal Mining, HAM Projects), which gives viability of 15 years of cash flow for DBL. Company will also bid for newly revised BoT Road projects, were they evaluate the opportunities & invest in BoT Assets
Order book of ₹21,800 crore (1.75x TTM revenue) provides visibility of growth. Retain Buy rating on the stock with revise SOTP base TP of ₹492 (earlier ₹410) as we rolled TP to FY26.