IDBI Capital Initiates "Buy" On Small Cap, Mid Cap Construction Stocks, Sees 31-34% Upside

IDBI Capital has placed a "Buy" on two Construction sector stocks namely Ahluwalia Contracts Ltd (AHLU) and PNC Infratech (PNCL). According to the given target price to the stocks by the brokerage, if you buy the stocks at their current market price, it could fetch a return of up to 34%. Check below to know more:

AHLU - Stock Outlook, Return, 52-Week Low/High

IDBI Capital has assigned a target price of Rs 650 apiece on the stock of AHLU, implying a potential upside of 34% from its current market price. The stock's current market price is Rs 487.30 apiece on NSE.

Its 52 week low is Rs 360 apiece and 52-week high is Rs 563.60 apiece, respectively. It is a small-cap stock having a market capitalisation of Rs 3,228.80 crore.

The stock has gained 2.19% in the last 1 week and declined 2.15% in the last 1 month. It gained 25.37% in the last 1 year, 47.21% in 3 years and 34.37% in the last 5 years, respectively.

 

AHLU - Buy for a target price of Rs 650/share

According to the brokerage, Ahluwalia Contracts (AHLU) Q3FY23 PAT came lower than our estimates by 9%. Miss was mainly due to lower execution (revenue) at +9% YoY versus our estimate of +15%. Having said this, company is eyeing 10-15% YoY revenue growth in FY23E, FY24E is expected to grow at +15% YoY. This implies execution to improve in Q4FY23. EBITDA margin incl. other income is currently at 10.5% and is guided to improve in Q4FY23 and close FY23 at +11% and for FY24 at +12%. Order book at Rs81bn provides visibility of ~3 years; and further build up is expected as AHLU has bid pipeline of Rs30bn. 9MFY23 order inflow is at Rs47bn (incl. L1 of Rs7bn), inflow in Q4FY23 is expected at Rs5bn+. "Post results, we maintain our BUY rating on the stock and TP Rs 650 (14x FY25E EPS)," the brokerage has said.

Key catalyst for stock performance: EBITDA margin improvement, robust execution.

 

PNCL - Stock Outlook, Return, 52-Week Low/High

The brokerage has assigned a "Buy" on PNCL with a target price of Rs 401 apiece, sees a 31% potential upside from its current level. The stock's current market price is Rs 307.55 apiece. 

Its 52 week low is Rs 219 apiece and 52-week high is Rs 352 apiece, respectively. PNCL is a midcap stock having a market capitalisation of Rs 7,901.41 crore.

 It has fallen 7.26% in one week, and 5.2% in one month, respectively. It gained 25.73% in the last 1 year, 55.24% in the last 3 years, and 87.94% in the last 5 years, respectively.

 

PNCL - Buy For a target price of Rs 401/share

According to the brokerage firm, PNC Infratech (PNCL) Q3FY23 PAT came in line with our estimates. Execution (revenue) was stable in Q3 at +7% YoY and importantly, EBITDA margin was maintained QoQ at ~13%. For FY24E, PNCL guides revenue growth at +15% YoY with stable EBITDA margin at 13.3-13.5% in FY24E. In YTDFY23 PNCL has not received any order and it expects new orders of ~Rs80-100bn in Q4FY23E. In the interim, orderbook of Rs178bn provides revenue visibility for ~3 years.

"Post results, we have introduced FY25E financials, rolled forward our TP to FY25E, we retain our BUY rating on the stock with revised TP of Rs401 valuing the EPC business at 12x FY25E EPS and investment valued at BV (earlier TP Rs355). Stock trades at 11x FY25E EPS and catalyst is conclusion of asset monetization deal, where equity of Rs15.5bn is invested till date," the brokerage has said.

 

Disclaimer

The stocks have been picked from the brokerage report of IDBI Capital. 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.