Dilip Buildcon extends gain; stock surges 29% in one week post Q3 results

Shares of Dilip Buildcon (DBL) rallied 13 per cent to Rs 415 apiece on Wednesday, extending its previous day's 4 per cent gain on the BSE after the company completed rehabilitation and up-gradation of NH-18 (New NH-40) from 108km/850km to 160km/200km (Rayachoty to Kadapa section) in Andhra Pradesh.

The company said the provisional completion certificate has been issued by the National Authority of India on February 11, 2019, and has declared the project fit for entry into commercial operation as on September 10, 2016, and consequently, the company is entitled to a maximum bonus of Rs. 3.56 crore in lieu of earlier completion (60 days prior to the schedule completion date) of the said project.

Meanwhile, in the past one week, DBL has outperformed the market by surging 29 per cent after reporting 26 per cent growth in net profit at Rs 209 crore in December 2018 quarter (Q3FY19). In comparison, the S&P BSE Sensex was down 2 per cent during the period.

Operational revenue grew 28 per cent at Rs 2,493 crore against Rs 1,948 crore in the corresponding quarter of previous fiscal. Ebitda (earnings before interest, taxation, depreciation and ammortisation) margin remained at the same level at 17.9 per cent against 17.99 per cent in a year-ago quarter.

DBL received orders worth of Rs 1,809 crore during the quarter including Indore and Bhopal Metro project worth Rs 475 crore. As of December 31, 2018, The company’s order book position stood at Rs 23,100 crore with roads segment contributing 81 per cent to the total order book.

“After already lowering the FY19E guidance by 5 per cent, DBL now remains confident of achieving around Rs 94-95/115 billion revenue in FY19/20E respectively. While DBL will prefer (engineering procurement and construction) EPC over hybrid annuity mode (HAMs) in roads, it will continue to look at less capex intensive projects like micro-irrigation, dams and metro projects,” analysts at HDFC Securities said in result review.

Even though the newer HAMs are facing some challenges before moving into execution, DBL continues to demonstrate its superior execution capabilities on its existing projects (with around Rs 50 crore bonus expected on the Lucknow Sultanpur stretch, around 8 months before time), the brokerage firm said in a report.

Going forward, analysts at Narnolia Financial Advisors expect, the revenue growth momentum will continue to remain strong on the back of robust order book with superior execution and early completion of projects will help to keep EBITDA margin healthy.

DBL has completed financial closure of all the 12 HAM projects and appointment date of 4 has been already received. Another couple of projects will receive appointment date in Q4FY19 and remaining 6 projects are expected to receive in Q1 of next year. Working capital days have improved from a high of 137 days to 83 days and it will further rationalize by way of implementation of SAP. A large amount of mobilization advance is expected to receive, which will keep borrowings level at 1x, the brokerage firm said result update.

At 12:22 pm, DBL was trading 11 per cent higher at Rs 407 on the BSE, against 0.28 per cent rise in the S&P BSE Sensex. The trading volumes on the counter jumped four-fold with a combined 1.42 million equity shares changed hands on the NSE and BSE so far.

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