India Infoline rates Ahluwalia Contracts India with 'buy'

Ahluwalia Contracts India
CMP: Rs 169
Target price: Rs 214

Brokerage house India Infoline has rated Ahluwalia Contracts (ACIL) a 'buy', citing revival in real estate development and new project announcements. According to the brokerage house, ACIL has diversified its client base and has forayed into government contracts to have a good mix of private and public projects to avoid slowdown in earnings and order book growth.

"Approximately 68% of the order book is from the private sector and public sector contributes the rest. Its Rs 4,600 crore order book provides significant earnings visibility for the next three years," said the India Infoline note to clients.

"The company is foraying into urban infrastructure projects, with expected investment of Rs 12,700 crore through JNNURM programme, which has a huge potential to be tapped. We value the core contracting business at 13 times FY11 (estimated) earnings and BOT project at 15% capitalised rate," the India Infoline note added.