Ahluwalia Contracts (India) - Emerging Corporates : INVESTOR FORUM Key takeaways :: HDFC Securities

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->
Ahluwalia Contracts Indian (ACIL) is a leading
building construction contractor. It has
diversified into the hospitality and commercial
spaces along with the mass housing segment.
ACIL had run into a few problems due to
increased exposure to private sector contracts,
increased debtor days on account of litigation
in certain cases, fixed cost contracts (without
escalation clause) and reduction in fund and
non fund based limits of ACIL by banks.
However, ACIL is getting operations back on
track through focus on more Government
contracts, judicious order selection and better
working capital management.
 Increased focus on Government contracts : ACIL
has streamlined its contracting policy by
renegotiating its contract prices to include
escalations. In addition to this, the company has
done away with low margin projects. As per ACIL’s
management, the reduction in exposure to private
contractors will lead to better debtor days and
reduced execution risks caused by litigations.
 Working capital cycle to improve : ACIL’s
promoters have recently infused Rs 0.5bn through
preferential allotment that will be used to reduce
the current working capital debt of Rs 1.8bn.
Further, the commencement of the Kota Bus
terminal project (revenues expected to accrue
from 3QFY15E onwards) is also a positive.
 Order book offers revenue visibility : ACIL has a
net order book of Rs 35bn as of Sep-14 (3.6x FY14
revenues). 55% of the same in concentrated in the
residential buildings segment. In addition to these,
ACIL expects Government projects worth Rs 7bn
of which Rs 5bn is in the construction of hospitals.
Overall, the management expects revenue growth
of 20-25% over FY15-17E driven by balance sheet
improvement and EBITDA margins remaining over
10%.

LINK
http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3010861