PRESS RELEASE
15th December, 2011
CARE Equity Research maintains Fundamental Grade of 4 to the
equity shares of Ahluwalia Contracts (India) Limited
AHLUWALIA CONTRACTS (INDIA) LIMITED
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About the Company
Incorporated in 1979 and subsequently converted into a public limited
company in 1990, Ahluwalia Contracts India Limited (ACIL) is engaged in
the construction business for over four decades. ACIL has executed
diverse projects across sectors like residential spaces, office spaces,
retail malls, hotels, hospitals, IT parks, SEZ, industrial buildings, etc
CARE Equity Research assigns Fundamental across geographies in India. Mainly involved in construction business,
Grade on a scale of Grade 5 to Grade 1, with ACIL also offers total integrated engineering and design turnkey
Grade 5 indicating ‘Strong Fundamentals’ and solutions to its clients in the public and private sector. ACIL through its
Grade 1 indicating ‘Weak Fundamentals’.
100 per cent subsidiary Ahlcon Ready Mix Concrete Private Limited
CARE assigns Valuation Grade on a scale of (ARMC) operates into the business of Ready Mix Concrete (RMC) – a
Grade 5 to Grade 1, with Grade 5 indicating step towards backward integration. The company has successfully
‘Considerable Upside Potential’ and Grade 1
completed various projects in the residential, commercial, educational
indicating ‘Considerable Downside Potential’.
institutes, retail, hotels, industrial plants and hospitality sectors.
Fundamental Grade
4 [Four] – ‘Very Good Fundamentals’
CARE Equity Research maintains a Fundamental Grade of 4 [Four] to the
equity shares of ACIL, indicating ‘Very Good Fundamentals’.
ACIL is largely present in civil construction with more than four decades
of execution track record and healthy diversification across sectors,
clients and geographies across India. The order book as of September
30th 2011 stood at Rs.3,620 crore, providing revenue visibility of around
two years.
ACIL reported revenues of Rs.303.9 crore in Q2FY12 (July 1 to
September 30) as against Rs.341.2 crore in Q2FY11, down 11 per cent yo-y. Revenues were impacted due to slower execution of commercial
and residential projects. The company reported an EBITDA of Rs. 4.5
crore in Q2FY12 as against Rs. 40.2 crore in Q2FY11, a drop of around
89% y-o-y, on account of 1) execution of low-margin orders, 2) cost
overrun in certain projects and 3) higher material costs wherein passthrough arrangements are not available. Consequently, EBITDA margin
too were lower at 1.5 per cent against 11.8 per cent in the previous
quarter last year, a decline of 1030 bps.
ACIL reported net loss for the quarter at Rs. 6.7 crore as against profit of
Rs. 20.8 crore in Q2FY11. Depreciation expenses increased by 34 per
cent to Rs. 10.5 crore due to increase in fixed cost (machinery) while
interest expenses increased by 41 per cent to Rs. 5.2 crore for the
quarter.
ACIL being primarily into civil construction is exposed to the risk of
slowdown in the economy, as the order-book is primarily inclined
towards private sector. Any further slowdown in the real estate sector
and the corporate capital expenditure would result in sluggish order
flows. High working capital cycle will also continue to be a challenge for
the company.
Analytical Contact
Business Development Contact
Amod Khanorkar
General Manager
Anil Varghese
AVP – Business Development
Hand phone: +91-9322123311
Direct Line: +91-22-6754 3673
anil.varghese@careratings.com
Direct Line: +91-22-6754 3520
amod.khanorkar@careratings.com
Fundamental Grade
CARE Equity Research’s Fundamental Grade is an opinion on the fundamental soundness of the company vis-à-vis other
listed companies in India. The grade is assigned on a five-point scale as under:
CARE Fundamental Grade
5/5
4/5
3/5
2/5
1/5
Evaluation
Strong Fundamentals
Very Good Fundamentals
Good Fundamentals
Modest Fundamentals
Weak Fundamentals
Valuation Grade
This grade represents the potential value in the company’s equity share for the investor over a 1-year period. The grade
is assigned on a five-point scale as under:
CARE Valuation Grade
5/5
4/5
3/5
2/5
1/5
Evaluation
Considerable Upside Potential (>25% upside from CMP)
Moderate Upside Potential (10-25% upside from CMP)
Fairly Priced (+/- 10% from CMP)
Moderate Downside Potential (10-25% downside from CMP)
Considerable Downside Potential (>25% downside from CMP)
Grading determination is a matter of experienced and holistic judgment, based on relevant quantitative and qualitative
factors of the company in relation to other listed companies.
DISCLOSURES
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Each member of the team involved in the preparation of this grading report, hereby affirms that there exists no conflict of
interest that can bias the grading recommendation of the company.
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The CARE EQUIGRADE report has been sponsored by the company.
DISLCLAIMER
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