Small Cap Construction Stock Gets Buy For 20% Gains, Declares Final Dividend, Soars 250% In 3 Yrs

HDFC Securities has placed a "Buy" on Ahluwalia Contracts (India) Ltd. (AHLU) with a target price of Rs. 700/share. According to the brokerage's given target price, the stock is likely to give up to 20% return if the stock is purchased at the current market price. AHLU is a small-cap stock operating in the Construction sector. It has a market capitalisation of Rs. 3,917.10 crore.

The Board of Directors of the AHLU on May 27, 2023, recommended a Final Dividend of Re. 0.40/share (20%)of the face value of Rs. 2/- each for the financial year 2022-23. The recommended dividend is subject to the approval of members of the company at the 44th AGM.

20% Final Dividend

"The Board has recommended a Final Dividend of Re. 0.40 paisa (20%) per Ordinary (Equity) Share of the face value of Rs. 2/- each for the financial year 2022-23, subject to the approval of members of the Company at the ensuing 44th Annual General Meeting. The details of Book Closure for the purpose of payment of Final Dividend for the Financial Year 2022-23 will be determined later," the company said in an exchange filing.

Robust outperformance

According to HDFC Securities, Ahluwalia Contracts (AHLU) reported revenue/EBITDA/APAT of 8.6/1.1/0.8bn, (missing)/beating our estimates by (17.7)/9.5/10.8%. While surpassing its FY23 order inflow (OI) guidance of INR 45bn with an OI of INR 50.6bn, the order book (OB) as of Mar'23 stood at INR 81.6bn. With an OI of INR 37.5bn in FYTD24, the OB as of date stands at ~INR 120bn (~4.2x FY23 revenue). The OB is well-diversified, providing a natural hedge from a slowdown in any particular business/geography segment. AHLU guided for FY24 revenue to grow by 20% YoY, with EBITDA margin (excl. other income) at ~11%+ and an OI of INR 20-25bn in the remaining part of the year.

"Given robust inflows, better margins and pick-up in execution, we recalibrate our FY24/25E EPS higher and increase the multiple to 14x from 13x. We maintain BUY on the stock, with an increased TP of INR 700/sh," the brokerage has said.

Stock Outlook

The stock of AHLU last traded at Rs. 584.75/share on NSE, down 2.44% from its previous close of Rs. 599.35/share. Its 52 week high is Rs. 617.65 apiece recorded on 29 May 2023 and its 52-week low is Rs. 370.90/share recorded on 20 June 2022.

The stock jumped 9.57% in the past 1 week. It has given 13.62% return in 1 month and 27% in 3 months, respectively. It gave 36.42% positive return in 1 year. In 3 years, it gave 250.04% positive return. In 5 years. It has given 57.02% positive return.

Disclaimer - The stock has been picked from the brokerage report of HDFC Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.