Stock To Buy: Small Cap Construction Stock Soars 51.83% In 3 Months, Recommends 75% Dividend

HDFC Securities places a Buy on ITD Cementation India Ltd. with an attractive target price of Rs. 170 apiece. Given the target price, the brokerage claims a potential upside of 14% from the stock's current level if purchased at the current market price.

The Board of ITD Cementation in their Board meeting held on May 25th, 2023, recommended a dividend at Re. 0.75/share i.e. 75% for the financial year 2022-23.

ITD Cementation India is a small cap construction sector company. The company is engaged in the business of providing design, engineering, procurement and construction (EPC) services for infrastructure projects in India. It has a market capitalisation of Rs. 2,563.93 crore.

Recommends Dividend

According to the regulatory filing by the Board of Directors of the ITD Cementation, "Recommended payment of dividend @ Re.0.75/- per equity share on 17,17,87,584 equity shares of Re. 1/- each (75% ) for the financial period ended 3pt March, 2023, subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company (AGM). The dividend, if declared at the 45th Annual General Meeting to be held on 28th August, 2023, will be paid on 15th September, 2023, to those members whose names appear in the Company's Register of Members on 28th August, 2023."

Robust execution, Buy for a Target Price of Rs. 170/share

According to HDFC Securities, ITD Cementation (ITD) reported revenue/EBITDA/APAT of INR 16.3/1.5/0.4bn, beating/(missing) our estimates by 13.7/23.5/(15.2)%. The miss is largely due to the share of losses from JVs. With an order inflow (OI) of INR 80.8bn in FY23, the order book (OB) as of Mar'23 stood at INR 200bn (~4x FY23 revenue, ex L1- INR16bn). The OB is well-diversified, providing a natural hedge from a slowdown in any particular business segment. The net D/E as of Mar'23 stood at 0.22x. ITD guided for FY24 revenue at INR 65-68bn with an EBITDA margin above 9% and OI of INR 80bn+. FY24 capex will be at ~INR 1bn. "We have recalibrated our estimates higher to factor in strong execution and better margins. We reiterate BUY, with an increased TP of INR 170/sh (10x Mar-25E EPS)," the brokerage has said.

Stock Outlook

The current market price of the stock is Rs. 149.25 apiece, up 1.63% from its previous close of Rs. 146.85 apiece on NSE. It traded its new 52 week high on 18 May 2023 at Rs. 156.30 apiece, while its 52 week low on 26 May 2022 at Rs. 57.60 apiece. The stock gave 28.44% positive return in the past 1 month and 51.83% in the past 3 months, respectively. In the past 1 year, it gave 148.54% positive return and 330.74% in the past 3 years, respectively. However, it declined 4.39% in the past 5 years.

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.