Why Dilip Buildcon is this week's stock pick | Economic Times

Dlip Buildcon surprised the street with a y-o y revenue and net profit growth of 17% and 14% respectively during the fourth quarter of 2020-21. Despite covid related disturbances, Dilip Buildcon was able to deliver 2% revenue growth in 2020-21. However, its net profit fell by 24% dur ing 2020-21 due to cost escalations. The company's effort to increase operational efficiency has started yielding fruits and it was able to reduce the net working capital days by 8 days y-o y and 22 days q-o-q.The government's infrastructural push is helping road construction companies like Dilip Buildcon in the long-term. It received Rs 29,958 crore worth of orders in 2020-21 taking its total or der book to Rs 27,411 crore, around three times its 2020-21 revenues of Rs 9,238 crore. Though order inflow may get delayed in the first half due to the second wave of covid, the company's order inflow is expected to pick up in the second half. It is expecting a robust order inflow of Rs 10,000-12,000 crore during 2021-22. Though execution de lays are impacting its short term revenues, Dilip Buildcon's high order book offers clear long-term growth visibility. As per consensus estimates, the company's revenue and net profit are expected to report a CAGR of 16% and 53% between 2020-21 and 2022-23. 83661406 Dilip Buildcon is also raising resources and bringing down its debt. It has reduced debt worth Rs 293 crore during the fourth quarter of 2020-21 and has recently raised Rs 510 crore at a price of Rs 540 per share through the QIP route. Dilip Buildcon's 12 HAM assets are either committed or at an advance stage of monetisation talks and expects to raise around Rs 900 crore in 2021-22 and Rs 1,100 crore in 2022-23. With these inflows, its net debt / equity ratio is expected to fall further to 0.5 times in 2021-22 versus 0.8 times in 2020-21.Several analysts changed their recommendation from buy to sell after the steep rally in the counter and the same is getting reversed to buy now because the recent correction has brought down its valuations to reasonable levels. Downside risk from current level is low because the market price now is close to its QIP issue price of Rs 540Selection Methodology: We pick up the stock that has shown the maximum increase in "consensus analyst rating" during the past one month. Consensus rating is arrived at by averaging all analyst recommendations after attributing weights to each of them (ie 5 for strong buy, 4 for buy, 3 for hold, 2 for sell and 1 for strong sell) and any improvement in consensus analyst rating indicates that the analysts are getting more bullish on the stock. To make sure that we pick only companies with decent analyst coverage, this search will be restricted to stocks with at least 10 analysts covering it. You can see similar consensus analyst rating changes during the last one week in ETW 50 table.Graphics by Sadhana Saxena/ET Prime