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Continue to remain conservative

Our view

Ahluwalia Contracts (AHLU) reported decent set of numbers with revenues in line with our estimates, while EBITDAM came below our estimates at 8.7% on account of input cost pressure. During FY22, the company has bagged projects worth Rs12.7bn taking its order book stands to Rs58.7bn (2.2x TTM revenue) as on 4QFY22, providing revenue visibility for next 2‐3 years.  Further with strong tender pipeline of Rs70bn already bided / planning to bid, management expects healthy order inflow of Rs25‐ 30bn in FY23E.

We remain positive on AHLU from a long‐term perspective given its 1) sound business strategy, 2) prudent selection of orders (state and central), 3) focus on asset light business model, 4) better working capital management. However, on the back of 1) inflationary RM prices, 2) intense competition in bidding process 3) conservative guidance from the management we have revised our FY24E Revenue / PAT estimates by ‐2%/‐11%. We maintain our ADD rating with a revised TP of Rs466 valuing the stock at 12x FY24E EPS (Earlier TP Rs415).  

Result Highlights

* For Q4FY22, ACIL’s revenues de‐grew marginally by 4% YoY to Rs7.3bn (in line with our estimate of Rs7.7bn), as the execution picked up sharply across project sites.

* EBITDA de‐grew 8.9% YoY to ~Rs636mn with EBITDAM witnessing an contraction of 47bps YoY to 8.7% (below YSec estimate of 10.5%). Margins were impacted on account of higher RM cost & subcontracting expenses

* Adj PAT grew 14.3% YoY to Rs424mn (in line with YSec estimate of Rs479mn), due to decline in finance cost and higher other income as compared to our estimates

* At the CMP, the stock trades at a P/E of 13.3x and 11.0x its FY23E & FY24E earnings.

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