Dilip Buildcon shares surge 20% in Tuesday's trade; here's why

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Dilip Buildcon shares surge 20% in Tuesday's trade; here's why

Dilip Buildcon shares rose sharply in Tuesday's trade amid heavy volume. The stock rose 20 per cent to reach its highest price band in the range of 202.95 against a previous close of 169.15. About 3.73 lakh shares changed hands yesterday on BSE, which was more than 10 times compared to the two-week average volume of 37,000 shares. The turnover at the counter was Rs. 7.13 crore, commanding a market capitalization m-cap of Rs. 2,967. 43 crore of the shares were valuing at an average of Rs 50,000 a year.

The company's net loss rose by 31.80 per cent in a year-on-year YoY basis. The quarter ended with a net loss of Rs 73.16 crore in March 2023, compared to Rs 55.51 crore a year earlier. The total income, however, rose by 684 per cent to Rs. 2,851 on a year-on-year basis. In Q4 FY 23 from Rs 2,668.39, 39 crores were reported. In the year-ago period, he netted 90 crore, or about 6 percent of its value.

Brokerage AnandRathi has assigned a 'buy' call on the counter for a one-year target price of Rs 255. The suggested target is just 2.26 per cent lower than Dilip Buildcon's 52-week high of Rs 260.75 on August 2 last year.

Two key notables from Dilip's Q4 FY 23 were the de-levering and a comforting pace of execution. With a net debt of around Rs 220 crore, sequentially, lower net debt in Q 4 to Rs 2,380 crore, and FY 23 de-levering at Rs 360 crore. Operating profitability was subpar, but the progressively depleting margin-drag older order book and rising contribution from recent orders suggest potential. Although aggressive revenue growth can necessitate further working capital, it is expected to grow in a measured way. The inflow guidance in FY 24 appears to conform to this. This, and continued efforts to prune working capital cycle and the restrained guidance to capex suggest that cash flow generation is still a priority. The brokerage said that the Monetisation effort was continuing and that the auction will continue to make more money.

While management sees margins to scale up to 13 - 14 percent in FY24 and we have baked in around 11.90 per cent for FY 24 and 12.40 per cent for FY 25 we do not rule out a risk to our estimates. To build in this risk, we lower our valuation multiple for the construction division at 4 x from 5 x earlier asset valuations have been adjusted for the recent stake transfers to Shrem InvIT and revised equity infusion schedule. The asset-ownership business has been considered at 0.8 x equity investments envisaged by FY25, AnandRathi further mentioned.

On technical setup, the stock was seen trading higher than the 5 - day, 20 - 50 - and 100 - day moving averages but lower than the 200 - day moving averages. The RSI RSI was down at 75.36 at the end of the 14-day relative strength index. A value below 30 is considered oversold, while a value above 70 is considered overbought. The stock has a P E ratio of 11.15, a price-to-equity ratio. Dilip Buildcon's stock market has experienced a sharp uptrend with a daily resistance of upto Rs 205.50, owing to its reduced debt and better full-year FY 23 results. Investors should bebooking profits at current levels and wait for a dip near support of Rs. 180 to initiate fresh buy positions for better returns, said AR Ramachandran of Tips 2 trades.

The scrip has an average target price of 234, Trendlyne data showed, suggesting a potential upside of 15 per cent. The market has a one-year beta of 1.15, which indicates high volatility on the counter.

Dilip Buildcon, a top infrastructure company, provides road construction, mining water, irrigation, sewage, dams, irrigation, industrial, commercial and residential buildings.

In afternoon deals today, Indian equity benchmarks surged, driven by gains in consumer goods and private lenders.

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