Buy ITD Cementation India, target Rs 211: HDFC Securities

HDFC Securities has a buy call on ITD Cementation India with a target price of Rs 211.

The current market price of ITD Cementation India is Rs 132.85.

Time period given by the brokerage is one year when ITD Cementation India price can reach the defined target.


The view of the brokerage on the company:
ITD Cementation’s (ITD) APAT came in 22.9 per cent ahead of our estimates at Rs 289mn.

Consolidated EBITDA margins expanded 204bps YoY to 13.2 per cent (vs. 10.1 per cent est.) led by better profitability in standalone and 100-150bps contribution from residual profits in completed marine projects.

2Q15MFY19 order wins/backlog stood at Rs 1/90.5bn ex L1 of Rs 9bn. Of this order book ‘Associate Order’ backlog is Rs 17bn hence from revenue perspective order book is Rs 73.6bn.

Associates contributed loss of Rs 40mn owing to tax demand in DMRC project post assessment. ITD is contesting the same.

ITD order wins for YTD15MFY19E stands at Rs 25bn with L1 status in Rs 9bn of contracts.

Bid pipeline of Rs 150bn is strong and we expect ITD to win Rs 30-40bn of new projects for rest of FY19E.

Post correction the valuation has become attractive at 11.2x FY20E EPS. Maintain BUY with a target price of Rs 211.