Buy ITD Cementation India Ltd For Target Rs. 221 - Yes Securities Ltd
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Our view
ITD cementation (ITCE) reported a strong set of numbers, with a strong 33% YoY revenue growth at Rs18.3bn led by robust execution while EBITDAM came in at 8.8% (incl provision of Rs290mn for Elevated Bangalore metro project). With an order inflow of Rs2.5bn, the orderbook as on 1QFY24 stood at Rs185bn (excl. L1 orders worth Rs55bn). Geographical wise, OB is well-diversified thereby providing a natural hedge from a slowdown in any particular business segment. With healthy 1Q execution, management has revised revenue guidance for FY24E to Rs65-70bn with EBITDA margin to close to double digit. FY24E capex will be at Rs1.5-2bn.
ITCE being a dominant player in urban infra space with MNC parentage, we remain positive on its a) healthy and diversified order book (Rs185bn as on 1QFY24) b) strong execution capabilities c) lean balance sheet (D/E of 0.5x) and d) advanced technology and skilled labour. With healthy execution in 1Q and strong order inflow guidance of Rs80-90bn, we raise FY24E and FY25E revenue estimates by 11%/10% and upgrade the stock to ADD with revised TP of Rs221, assigning a 10x multiple to its FY25E EPS of Rs22.1.
Result Highlights
* For Q1FY24, ITD’s revenues grew 67% YoY to Rs18.3bn (above our and street estimates of Rs13.8n and Rs14.7bn) on the back of robust execution in its key projects.
* The company reported an EBITDA of Rs1.6bn (above our estimates of Rs1.2bn) with EBITDAM expanding 66bps to 8.8% (above our and street estimates of 8.4% / 8.5%). The margins improved on account of lower other expenses.
* On the bottom-line front, adj. PAT came in at Rs523mn (above our estimates of Rs407mn), owing to better operating performance.
* As on 1Q, company bagged orders worth Rs2.5bn taking the orderbook to Rs185bn
* At the CMP, the stock trades at a P/E of 11.5x FY24E and 8.6x FY25E EPS.
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