Buy Ahluwalia Contracts; target of Rs 320: Religare

AHLU’s Q1FY17 PAT at Rs 215mn (+14.5% YoY) was in line with estimates even as topline fell short of expectations due to delays in certification of bills. Cost optimisation and a better order mix drove a 160bps expansion in EBITDA margins to 14%. Order inflows of Rs 9.5bn till date in FY17 shored up the order book to Rs 42bn (plus L1 position in orders worth Rs 2.5bn). We restate BUY (Mar’17 TP: Rs 320) as we derive comfort from AHLU’s strong order inflows, improving margin profile and reducing debt.

We value AHLU at 15x-FY18E EPS. Maintain BUY; Mar’17 TP Rs 320.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.