August 19, 2022 by admin

Buy This Small Cap Construction Stock For Target Price Of Rs 126, Gave 64.24% Returns In 3 Months

HDFC Securities in its recent report on ITD Cementation Limited suggests buy the stock of the company for a target price of Rs 126 apiece.

The brokerage claims potential gains of Rs 34% considering the estimated target price. ITD Cementation is a small-cap construction company with a market capitalization of Rs 1,631.98 crore.

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 check with certified experts before taking any investment decision.

Stock outlook
The current market price of the stock is Rs 94.75 apiece, opened at Rs 93..50 apiece, trading 2.65% up the previous close. The current market price is Rs 39.15 above its 52-week low of Rs 55.60. on the other hand, the current market price is trading Rs 4.95 below the 52-week high of Rs 99.70.

Returns on Investments

Over the week, the stocks of the company gained 12.12%. Whereas, in the past 1 and 3 months, the stocks moved up by 24.23% and 64.24%, respectively. In the past 1 year, the share price has surged 17.1%. In 3 years, the stocks gave a positive return of 33.03% and in 5 years stocks gave a negative return of 41.81%.

Financial highlights

ITD booked revenue of Rs 11bn (+33%/-6.5% YoY/QoQ, an 8% miss). EBITDA came in at Rs 895mn (+14%/+7% YoY/QoQ, a 16% miss). EBITDA margin: 8.2% (-132/+102bps YoY/QoQ, vs. our estimate of 8.9%). Interest cost: Rs 347mn (+3.4%/+2.6% YoY/QoQ). Depreciation: Rs 252mn (-6.7%/+2.2% YoY/QoQ). Other income: Rs 85mn (+3.5x/+2.8x YoY/QoQ). RPAT/APAT: Rs 301mn (+68%/+83.5%; a 24.4% miss). With monsoons impacting execution in Q2, the topline is expected to similar at Q1 levels.

Robust OB; diversification at play

With an OI of Rs 60.8bn in Q1FY23, (OI – FYTD23 at ~INR 65.3bn) the OB, as of Jun’22, stood at INR 206.4bn (~5.4x FY22 revenue), which is a lifetime high for the company. Client-wise, the OB is diversified among private/government/PSUs at 34/44/22%. Business-wise, the OB is diversified among urban infra/highways/marine/ industrials/dams and tunnels/waste water/specialist engineering at 33.3/24.1/20.5/8.5/7.5/ 4/2.2%. Geographically, ITD has orders in 14 states, 1 UT and 1 international location.

Comfortable balance sheet

ITD’s consolidated gross debt as of Jun’22 stood at ~Rs 5bn (similar to Mar’22 debt at Rs 5.2bn). With cash and cash equivalents as of Jun’22 of Rs 1.8bn vs. Rs 3.8bn as of Jun’22, the net debt stood at Rs 3.2bn vs. Rs 1.3bn as of Mar’22. The net D/E as of Jun’22 stood at 0.29x vs. 0.11x as of Mar’22, providing room for further growth. ITD guided for FY23 debt to be slightly more than Rs 5.2bn (FY22).

HDFC Securities Suggests Buy For a Target Price of Rs 126 apiece

According to the brokerage firm, “ITD Cementation (ITD) reported Q1FY23 revenue/EBITDA/APAT at Rs 11/0.9/0.3bn, missing our estimates on all fronts by 8/16/24.4%. FY23 revenue guidance remained unchanged at 25% YoY growth for FY23, with margin in high single digit, and as commodity inflation is expected to cool off in the coming quarters, the margin is expected to move into lower double digits in FY24. With an OI of Rs 60.8bn in Q1FY23, the OB, as of Jun’22, stood at Rs 206.4bn (~5.4x FY22 revenue), which is a lifetime high for the company. The OB is well-diversified, providing a natural hedge from a slowdown in any particular business segment. The net D/E as of Jun’22 stood at 0.29x vs. 0.11x as of Mar’22, providing room for further growth. Given strong inflows, we have recalibrated our estimates higher. We retain BUY, with an increased Target Price of Rs 126 (10x Mar24E EPS).”

About – ITD Cementation limited

ITD Cementation India is a leading construction company in India operating for over eight decades and has established its prowess across multiple lines of business: Maritime Structure, Highways, Bridges & Flyovers, TBM & NATM Tunnels, Foundation & Specialist Engineering, Airport, Industrial Structure & Building, Mass Rapid Transit Systems, Box Pushing, Tube Heading & Microtunelling, Hydroelectric Power, Dams & Irrigation, Water & Waste Water.