Buy Ahluwalia Contracts (India) Ltd., target Rs 345.0 : Reliance Securities

Reliance Securities has Buy call on Ahluwalia Contracts (India) Ltd. with a target price of Rs 345.0. The current market price of Ahluwalia Contracts (India) Ltd. is 293.0. Time period given by analyst is year, when Ahluwalia Contracts (India) Ltd. price can reach defined target. Ahluwalia Contracts (ACIL) reported a top-line growth of ~16% yoy at to Rs 305 crore marginally below our estimates in 1QFY17. Its operating profit surged by robust ~33% yoy to Rs424mn vis-à-vis our expectation of Rs413mn. EBITDA margin stood at strong 13.9% (+183 bps yoy & +15bps qoq) for 1QFY17 mainly due to execution of high-margin projects, while net profit grew by ~14% yoy to Rs215mn. Reliance Securities maintains a positive view on the stock, as it believes that ACIL is well-poised to witness a healthy traction on the backdrop of healthy order book, sound return ratios, improving balance-sheet amid positive indications on macroeconomic front. Its current order backlog stands at Rs 4230 crore (3.3x TTM revenue), which provides healthy revenue visibility. Further, ACIL is expected to add orders worth Rs 2400 crore (+50% yoy) in FY17E & Rs 2800 crore (+17% yoy) in FY18E.