Here are all the Brokerage and Research Entities Review / Recommendations of
Dilip Buildcon IPOAmbit Capital Analyst said,
Dilip Buildcon’s (DBL) high order book and standalone revenue CAGR over FY11-15 (53%/ 57%) has not yielded sufficient cash (cum. pre-tax CFO/EBITDA of 40%). Higher-than-industry receivable and inventory days result in industry-leading cash conversion cycle (112 days). Whilst growth prospects appear strong, we are surprised and uncertain of sustainability of industry-high EBITDA margins (FY15: 22% vs 10-14% for peers); meaningful unwinding of working capital is unlikely given changes in NHAI payment rules hence standalone debt/ equity (FY15: 2.5x vs <0.8x for peers) poses risks to net margins. Corporate governance concerns emanate from pending litigations against promoters and media articles suggesting political connectivity and questionable behavior. Don't Subscribe is the recommendation.
Binod Modi of Reliance Securities Ltd said,
In our view, DBL would generate a healthy cash flow, going forward on the back of healthy margins, improving working capital cycle and healthy mix of asset business. Thus, we believe the promoters have left something on the table for the investors in terms of valuations and we expect the issue to generate a better return in the near to medium term for the investors. Hence, we recommend SUBSCRIBE to the IPO.
Destimoney Securities has the following recommendation,
Dilip Buildcon Ltd is coming up with a Rs. 29,953 mn IPO. The issue would open on 1-Aug-2016 till 3-Aug-2016 with the price band of Rs214-219 per share. DBL is available at 6.7x trailing valuation which seem cheaper as compared to peers like KNR Construction, but it also factors in the inherent balance sheet stresses. We continue to prefer balance sheet strength over rapid growth in infra space and hence recommend investors to AVOID the issue
Angel Broking Analyst Yelappa Santosh said,
On the valuation front, at the higher-end of the issue price band, the company is available at a slight discount to its other listed road focused EPC peers on an Adj. P/E basis (on FY2016E EPS). The company reported a RoE of 22.4% in FY2016, which is among the best in the industry. Given the growth prospects and the likelihood of strong FCF generation (supported by WC cycle compression), this issue has the potential to deliver good returns for investors in the near-to-medium term. Accordingly, we advise investors to SUBSCRIBE to the issue.
BP Wealth Research Team Said,
We believe that going forward the company would post a robust growth on the back of a well established business model along with an experienced management team. There has also been a credit rating upgrade in last 5 year which will further reduce interest expenses. With strong focus of government toward road sector both in terms of projects awarded and payments done on time the company tends to benefit. Thus we assign a SUBSCRIBE rating
Antique Stock Broking Analysts Dhaval Patel and Rahul Modi said,
DBL enjoys superior margins than its peers at 20% due to early execution and as it buys its own equipment as against a leasing
model. We believe the company is well placed for earnings CAGR of 20% as it is well diversified across states, has a strong execution track record and has a robust order book which provides visibility for the next two years. At the price band of INR214-219 per share, implied market is INR29.3-30bn. At the higher end of the band, the stock will be trading at 8.2x FY18 standalone earnings as against its
peers which are trading at 12-15x.
Arihant Capital Markets Analysts said,
The issue has been offered in a price band of Rs 214 P/E of 13 (x) based on FY 16 financials. The issue looks fairly valued against its peer group companies. We have "4 star" rating for the issue.
Geojit BNP Paribas has the following Review,
Further, DBL has never defaulted in the repayment of any borrowings and its rating has been steady at “A-” which is better than other EPC players in industry. DBL’s EBITDA & PAT has grown at a CAGR of ~39.4% & ~16.1% respectively over FY12-16. This has enabled the company to report robust ROE of ~22% in FY16. At upper price band of Rs219, it is available at an attractive valuation of 15.2x FY16 PE (adjusted for IPO dilution). We recommend “Subscribe” to the issue, with a medium-to-long term perspective.
Aditya Birla Money has the following Review,
DBL is one of the fastest growing construction companies in India with sales and order book growing 3.6x and 4.1x respectively from FY12-FY16. Owning equipment fleet and before time completion of projects gives an edge over its competitors and aids DBL in garnering more orders. Given the execution track record and current order book we believe, DBL will be one of the fastest growing companies in the construction space. Stable annuity portfolio and falling interest rate regime will aid DBL’s profitability going forward. At the higher price band of `219, the stock is valued at 13x its FY16 earnings and 6x its FY16 EV/EBITDA, which is in-line with peer group valuations. Given strong order book, execution capabilities and stable BOT portfolio we recommend a “SUBSCRIBE” rating on the stock
