Ahluwalia Contracts (India) reports 37.2% EBITDA growth in 2016 and 1.8 pp EBITDA Margin growth from 11.1% to 12.9%

24-05-2016 • About Ahluwalia Contracts (India) ($AHLUCONT) • By InTwits

Ahluwalia Contracts (India) reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

EBITDA Margin is expanding: 12.9% in FY2016 vs. 11.1% in FY2015 vs. 2.2% in FY2012
EBITDA Margin is quite volatile: 12.9% in FY2016, 11.1% in FY2015, 3.7% in FY2014, -2.1% in FY2013, 2.2% in FY2012
Ahluwalia Contracts (India) has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's in pair with industry average of 3.3%
CAPEX is quite volatile: ₹223m in FY2016, ₹219m in FY2015, ₹339m in FY2014, ₹355m in FY2013, ₹651m in FY2012
The company has highly profitable business model: ROIC is 27.1%

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Ahluwalia Contracts (India)'s Revenue surged on 17.9%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 6.2 pp from 3.6% to 9.8% in FY2016. EBITDA Margin followed a growing trend at 3.5 pp per annum in FY2012-FY2016.

Net Income margin increased slightly on 0.71 pp from 6.0% to 6.8% in FY2016. Net Income margin grew at 3.1 pp per annum in the last 5 years.

Investments (CAPEX, working capital and M&A)

Ahluwalia Contracts (India)'s CAPEX/Revenue was 1.8% in FY2016. Ahluwalia Contracts (India)'s CAPEX/Revenue decreased slightly on 0.70 pp from 2.5% in FY2013 to 1.8% in FY2016. Average CAPEX/Revenue for the last three years was 2.5%.

Return on investment

The company operates at high and attractive ROIC (27.1%) and ROE (22.2%). ROIC increased on 5.9 pp from 21.2% to 27.1% in FY2016. ROE showed almost no change in FY2016. ROIC stuck to a growing trend at 9.8 pp per annum in the last 5 years.

Leverage (Debt)

Company's Net Debt / EBITDA is 0.3x and Debt / EBITDA is 0.9x. Net Debt / EBITDA dropped on 0.5x from 0.8x to 0.3x in FY2016. Debt dropped on 18.0% while cash surged on 15.4%.

Ahluwalia Contracts (India) has short term refinancing risk: cash is only 62.2% of short term debt.

Valuation and dividends

The company's trades at EV/EBITDA 11.3x and P/E 21.0x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 13.1x with the industry average at 22.8x.

Financial and operational results

Ahluwalia Contracts (India) ($AHLUCONT) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	14,459	14,309	9,606	10,599	12,496	17.9%
EBITDA	318	-306	356	1,178	1,616	37.2%
Net Income	-464	-713	217	640	844	31.8%
Balance Sheet
Cash	470	359	183	765	883	15.4%
Short Term Debt	1,965	2,326	2,057	1,641	1,418	-13.6%
Long Term Debt	299	414	329	90	2	-98.0%
Cash flow
Capex	651	355	339	219	223	1.6%
Ratios
Revenue growth	-17.5%	-1.0%	-32.9%	10.3%	17.9%
EBITDA growth	-81.3%	-196.1%	-216.6%	230.5%	37.2%

EBITDA Margin	2.2%	-2.1%	3.7%	11.1%	12.9%	1.8%
Net Income Margin	-3.2%	-5.0%	2.3%	6.0%	6.8%	0.7%
CAPEX, % of revenue	4.5%	2.5%	3.5%	2.1%	1.8%	-0.3%

ROIC	-3.2%	-15.8%	5.6%	21.2%	27.1%	5.9%
ROE	-15.5%	-29.7%	10.1%	22.7%	22.2%	-0.5%
Net Debt/EBITDA	5.6x		6.2x	0.8x	0.3x	-0.5x

Peers in Realty

Below we provide Ahluwalia Contracts (India) benchmarking against other companies in Realty industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Sspdl ($SSPDL)	16.2%	-11.8%	-43.4%	326.1%	-
Orbit Corporation ($ORBITCORP)	-	-21.9%	-88.0%	275.1%	-98.6%
Ajmera Realty & Infra India ($AJMERA)	-	-61.7%	-1.8%	109.9%	92.0%
Prajay Engineers Syndicate ($PRAENG)	-21.1%	42.0%	-30.1%	62.8%	-
Godrej Properties ($GODREJPROP)	-	34.7%	13.7%	56.3%	35.9%
Median (34 companies)	-5.0%	5.6%	-1.8%	13.2%	15.5%
Ahluwalia Contracts (India) ($AHLUCONT)	-	-1.0%	-32.9%	10.3%	17.9%

Top companies by Gross margin, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Godrej Properties ($GODREJPROP)	24.9%	33.3%	28.9%	19.4%	14.7%
Median (1 company)	24.9%	33.3%	28.9%	19.4%	14.7%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Hubtown ($HUBTOWN)	53.3%	72.4%	67.6%	82.4%	-
Housing Development & Infrastructure ($HDIL)	75.8%	40.6%	102.5%	78.9%	-
Tci Developers ($TCIDEVELOP)	-	-	-	75.9%	-
Orbit Corporation ($ORBITCORP)	42.4%	53.3%	-127.2%	69.8%	-
Oberoi Realty ($OBEROIRLTY)	59.3%	58.9%	54.5%	56.4%	47.7%
Median (43 companies)	20.1%	18.1%	20.1%	22.6%	23.3%
Ahluwalia Contracts (India) ($AHLUCONT)	2.2%	-2.1%	3.7%	11.1%	12.9%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Prozone Intu Properties ($PROZONINTU)	-	-	-	89.5%	-
Ashiana Housing ($ASHIANA)	-	-	-	26.7%	-
Brigade Enterprises ($BRIGADE)	45.7%	10.7%	17.0%	18.5%	56.3%
Prestige Estates Projects ($PRESTIGE)	37.7%	30.2%	18.8%	11.6%	-
Parsvnath Developers ($PARSVNATH)	15.9%	-	11.6%	10.6%	15.6%
Median (30 companies)	4.9%	2.5%	3.7%	2.5%	2.5%
Ahluwalia Contracts (India) ($AHLUCONT)	4.5%	2.5%	3.5%	2.1%	1.8%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Poddar Developers ($PODDARDEV)	3.9%	2.6%	12.9%	19.1%	7.5%
Lancor Holdings ($LANCORHOL)	18.0%	11.6%	19.5%	17.7%	-
Mahindra Lifespace Developers ($MAHLIFE)	10.4%	11.7%	6.6%	14.9%	4.6%
Sobha Developers ($SOBHA)	18.8%	16.7%	14.6%	12.7%	9.0%
Arihant Superstructures ($ASL)	12.2%	4.9%	10.6%	12.0%	-
Median (50 companies)	5.9%	5.1%	5.7%	6.8%	6.4%
Ahluwalia Contracts (India) ($AHLUCONT)	-3.2%	-15.8%	5.6%	21.2%	27.1%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
D B Realty ($DBREALTY)	13.2x	135.4x	14.0x	54.8x	-
B.L.Kashyap And Sons ($BLKASHYAP)	8.2x	5.8x	12.7x	40.1x	-
Vipul ($VIPUL)	0.7x	3.0x	10.8x	26.0x	-
Ansal Properties & Infrastructure ($ANSALAPI)	12.8x	11.9x	11.4x	16.6x	-
Srs Real Infrastructure ($SRSREAL)	11.7x	10.0x	12.9x	14.7x	-
Median (37 companies)	5.1x	4.8x	4.9x	4.0x	4.7x
Ahluwalia Contracts (India) ($AHLUCONT)	5.6x	-	6.2x	0.8x	0.3x

Ahluwalia Contracts (India) stock price chart

Ahluwalia Contracts (India) financials

mln.	FY2010	FY2011	FY2012

Revenue	12,020	17,530	14,459
EBITDA	1,798	1,697	318.1
Net income	817.8	720.5	-464.293
CAPEX	496.1	845.3	651.2
Debt	1,526	1,870	2,264
Cash	1,372	944.1	469.6

About Ahluwalia Contracts (India)

Ahluwalia Contracts (India) Limited, together with its subsidiaries, is primarily engaged in the construction activities in India. It executes projects across residential, commercial complexes, hotels, institutional buildings, hospitals and medical colleges, corporate office complexes, IT parks and industrial complexes, metro rail stations and depots, power plants, motorized car parking, and other projects. The company is also involved in the provision of supply, installation, testing, and commissioning services for switchyards, DG sets, power transformers, switchboards, relay and control panels, overhead and underground electrical networks, public addresses, communication and security systems, fire alarms, computer networks, etc.; and design, supply, and installation of aluminum doors, windows, channels, and curtain walls, as well as provides marketing, project and quality management, and coordination services. In addition, it provides marketing, commercial scrutiny, costing, designing, and basic and system engineering services for plumbing systems. Ahluwalia Contracts (India) Limited was founded in 1965 and is headquartered in New Delhi, India.