HDFC Securities Recommends To ‘Buy’ This Stock For 15% Return

Target Price

The Current Market Price (CMP) of Ahluwalia Contracts is Rs. 450. The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 519. Hence the stock is expected to give a 15% return, in a Target Period of 1 year.

Company performance

“Ahluwalia Contracts (AHLU) reported a revenue/EBITDA/APAT beat of 24/(1.1)/(1.4)%. Whilst execution normalized since the start of Q2FY22, commodity price volatility negatively impacted margins,” the brokerage firm informs. Given robust execution, AHLU has increased the earlier 15-20% revenue growth guidance for FY22 to 20-25% and, given benign commodity prices, it lowered 11-12% EBITDA margin guidance to ~10%. The NWC days reduced to 91, from 107 in Q1FY22.

Comments by HDFC Securities

According to HDFC Securities, “Given robust order book (OB) and execution, we have increased our estimates for FY22/23/24. We maintain Buy with an increased TP of Rs. 519 (13x multiple; Sep-23E EPS), given the robust OB, net cash balance sheet, and better RoE/RoCE than peers. We expect the uptick in growth and margin expansion to continue through H2 FY22 as Covid-19 headwinds recede.”

About the company

With specialized experience in the Construction Industry for more than 40 years, Ahluwalia Contracts, have carved a niche in the industry. Their turnover was over Rs. 1982.19 Crores for the FY 2020-21. they have worked for some of the most recognized commercial and institutional projects. They are also associated with ITC hotels and AIMS hospitals for construction.

Disclaimer

The above stock has been picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.