1

Initiation coverage
12th December 2009

Sector: Construction and infrastructure

Recommendation: BUY

CMP: Rs. 178.00

Target: Rs. 250

MARKET DATA
CMP
EPS (TTM)
P/E
Book Value per share
52 Week High
52 Week Low
Equity Shares (mn)
Mkt. Cap (Rs. mn)

Rs.
178.00
11.56
15.40
28.22
188.00
27.00
62.76
11,171.28

About the Company

Ahluwalia Contracts India Ltd (ACIL) has established itself as the flag-bearer of the
countrys construction sector. It is mainly engaged in the business of construction of a
range of structural buildings and manufacturing of ready mix concrete (RMC). It offers
single-window, totally integrated engineering and design turnkey solutions to clients in the
public and private sector. It has one of the largest installed capacities producing over 1800
cubic meters of concrete a day, delivered by the largest fleet of self owned transit mixers.

CODES
BSE

532811

Bloomberg

AHLU IB

Price-Volume Graph
2000.00

250.00

ACIL was incorporated in June 1979 and has four decades of experience in construction.
It caters to the construction and infrastructure needs of diverse clientele in more than 50
cities across 16 states in India. It has a sound quality assurance system, approved under
ISO 9001, ISO 14001 and OHSAS 18001 by Det Norske Veritas (DNV). Over the last 6
years, ACIL has successfully executed more than 80 projects. The company has pan India
presence and is currently executing approximately 70 different projects. Recently, ACIL
was awarded as the 2nd fastest growing construction company in the Seventh
construction world- annual award 2009 held in Mumbai.

1800.00
200.00

1600.00
(V o lu m e ' 0 0 0 )

1400.00
150.00

1000.00

R s.

1200.00

800.00

100.00

ACIL has excellent track record of providing highly skilled and time-bound
services to prestigious clients across the entire bandwidth of the public and private
sectors. Its key areas of operation include - construction of Commercial Buildings,
Hotels, Hospitals, Educational Institutions, Industrial Plants, Residential Projects,
Townships, BOOT Projects, Urban Infrastructure, etc.

Outlook and Valuation: Bright prospects; initiating with BUY

600.00
400.00

50.00

200.00
0.00
A p r-0 8
M a y-0 8
Ju n -0 8
A u g -0 8
S e p -0 8
N o v-0 8
D e c-0 8
F e b -0 9
M a r-0 9
M a y-0 9
Ju n -0 9
A u g -0 9
S e p -0 9
N o v-0 9

0.00

Source: BSE

Despite the recent meltdown in the entire construction sector, the company has witnessed
robust order inflows and maintained its superiority by effectively managing working
capital cycle and leverage. Its large order book along with its reputation and skills of
executing specialised construction projects is likely to reflect in companys overall financial
performance, going forward. At CMP, the stock trades at 12.42X its FY10E earning and
9.95X its FY11E earning. We initiate the coverage on the stock with a BUY
recommendation and a twelve months investment horizon with the target price of Rs250,
an upside of 40.4%, offering attractive investment opportunity at current level.

Performance Overview
Analyst:
Umesh Patel
(022-66184011)
umesh.patel@wallfort.com

Date End
FY 2008
FY 2009
FY 2010 (E)
FY 2011 (E)

Net Sales
8865.74
12004.55
15358.76
18727.10

(Rs mn)

EBIDTA
1127.51
1552.03
2111.83
2584.34

Net Profit
516.34
572.87
899.44
1122.27

EBITDAM
12.72%
12.93%
13.75%
13.80%

NPM
5.82%
4.77%
5.86%
5.99%

EPS
8.23
9.13
14.33
17.88

Source: Company, Wallfort Research

Initiation coverage
Fig: Shareholding pattern (Sept 09)

Promoter
75%

Fig: Relative Performance

Institution
3%
FII
3%

145
130
Public
19%

115
100
85
70
55

SENSEX

40
25

ACIL
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09

10

Source: BSE, Wallfort Research

Investment Rationale
Huge prospect in infrastructure segment:

ACIL is well
positioned to deliver
quality projects in the
infrastructure space

ACIL is engaged in actively bidding for urban infrastructure Projects. It is looking for
technology collaborations and acquisitions in areas of detailed engineering and specific
technology requirements in Sewage Water Treatment, Urban Drainage, Water Sanitation,
Power Plant and Airports. In addition, it is expected to increase focus more on
infrastructure and Government projects to perk up the order book quality and future
revenue visibility. We believe that it is well positioned to deliver quality projects in the
infrastructure space as like airport infrastructure, metro rail and road infrastructure projects,
development of various Government funded civil projects (universities, healthcare centres,
etc), which entails a huge opportunity for ACIL to encash the same.

Consistently delivering superior return:

Growing revenues and profit year on year, and strong ROCE and ROE, reflect the
Company's leadership position in the sectors of its presence. Given its relatively low D/E
ratio (0.52 in FY2009), ACIL is well-poised to raise further debt, if required, in order to
fund its expansion plans.

Healthy Order book position:

ACIL currently has a strong order book of approximately Rs51,120mn spread across
different regions of the country. Besides this, it has bid for approximately 30 projects worth
Rs.12,000mn. Order book is expected to increase at a CAGR of 28.0% from FY2009 to
FY2011E.

Initiation coverage
Fig: Order book performance

Fig: Region wise : Order book position

70000
East
12%

60000
67500

Rs mn

50000
52000

40000
41430

30000

North
58%

31580

20000
10000

West
17%

South
13%

16220

0
FY2007

FY2008

FY2009

FY 2010E FY 2011E

Year

Source: Company data, Wallfort Research

Some of the schemes announced to boost the infrastructure during the budget 200910 are as follows:

Increase in infrastructure spending of more than 9% of GDP by FY2014 from current
level of approximately 4%.

Infrastructure Finance Company Ltd (IIFCL) will refinance 60% of commercial bank
loans for PPP projects and will also provide long term financial assistance to a wide
range of infrastructure projects.

Allocation under JNNURM increased by 87% to Rs129bn for FY2010.

NHAI allotted funds to the tune of Rs160bn in FY2010, indicating an increase of 23%
over previous year, which is expected to provide boost to order books of companies
focused on roads and highway segments.

Allocation for RGGVY has been increased by 27% to Rs70bn for FY2010.

Exploring the Urban Infrastructure Opportunity:

Immense opportunity
under JNNURM
scheme

Going forward, ACIL is expected to increase its focus on infrastructure and Government
projects which would perk up the order book quality. Currently, it is engaged in actively
bidding for Urban Infrastructure Projects like Metro Rail in Mumbai, Delhi and Bangalore,
Airport development in Ranchi, etc. Under the JNNURM scheme, projects worth
Rs.6,92,000mn are to be allocated over the next 3 years, thereby providing ACIL a
substantial opportunity landscape in the Urban Infrastructure space. Besides this, it is
looking at a higher degree of engagement through acquisition or joint venture opportunities
in this segment, which will provide synergy to existing business, going forward.

Stable margins and returns:

ACIL has been very consistent with its margins and ratios, reflecting its operating efficiency
in the recent past. It has been able to maintain its ratios at a supreme level compared to its
competitors during the slowdown in construction sector. Going forward, we expect
company to experience better margin expansions.

Initiation coverage
Business Description
ACIL is expanding its presence across India and places itself in an ideal position to reap the
benefits of the growth in urban infrastructure development. Currently, it is operating in two
segments with diversified business model shown below:
Fig: Business Model

Ahluwalia Contracts India Ltd

Construction

Infrastructure

Residential

Metro Rail

Commercial

Airport Projects

Retails &
Hospitals

Other
Infrastructure

Hotels

Urban
Infrastructure

Source: Company data, Wallfort Research

Initiation coverage
 ACIL is engaged in the construction and infrastructure activities across India. It
includes construction of corporate offices, shopping malls & complexes, buildings
for hospitality sector and housing projects. Under Infrastructure business, it builds
bus terminals (BOT), canals, Metro rails & urban infrastructure.
 It is executing a turnkey projects on account of its in-house competencies for
plumbing, fire-fighting, electrical and HVAC (heating, ventilation, air-conditioning)
services and in-house production of RMC (ready mix concrete) , as well as fixing of
aluminium and glass facades, aluminium doors, windows and partitions.

One stop solution

provider in
construction sector

 The company also has in-house architectural support. This integrated construction
services provider model gives it an edge over its competitors as it provides for
single source planning and control, elimination of conflict between key stake
holders of the project, efficient and timely co-ordination of various activities,
quality and schedule of projects.
 The Company's diverse portfolio is evident from its continuous expansion into
newer segments of the infrastructure space and actively bidding for Urban
Infrastructure Projects (especially projects under the JNNURM scheme) and is
currently associated with projects like Metro Rail in Mumbai, Delhi and Bangalore,
Airport development in Ranchi, etc.
 The Company is now looking for technology collaborations and acquisitions in
areas of detailed engineering and specific technology requirements in Sewage Water
Treatment, Urban Drainage, Water Sanitation, Power Plant and Airports.
 ACIL has been steadily increasing its share in Government projects, which
currently stood 33% of the total order book, to de-risk its business model to ensure
revenue visibility in the current environment.

Fig: Client wise: Order book position

Fig: Segment wise : Order book position

2%

8%

27%

33%
24%

16%

67%

10%
7%

Government Orders

Private Orders

6%

Residential

Commercial

Retail

Hotel

Hospital

Infrastructure

Institutional

BOT

Source: Company data, Wallfort Research

Initiation coverage
Financial highlights:

Robust top-line
growth from FY
2006 to FY 2009

Fig: Historical financial performance (Rs mn)

FY 2006
FY 2007

FY 2008

FY 2009

Total Revenues
y-o-y growth
EBITDA
margin
EBIT
margin
PAT
margin
EPS*

8,865.74
31.41%
1,127.51
12.72%
899.50
10.15%
516.34
5.82%
8.23

12,004.55
35.40%
1,552.03
12.93%
1,072.68
8.94%
572.87
4.77%
9.13

4,196.87
37.49%
430.11
10.25%
332.55
7.92%
193.47
4.61%
3.08

6,746.77
60.76%
749.38
11.11%
550.59
8.16%
311.86
4.62%
4.97

Source: Company data, Wallfort Research,*Stock split adjusted EPS for 2006 & 2007

Over the past three years, ACIL has reported strong top-line growth with a CAGR of
49.6%, reflecting strong order book and project executions. EBITDA income
increased at a CAGR of 42.5% during the period from FY2006 to FY2009, primarily
due to operational efficiency and effective cost control while net profit increased at a
CAGR of 48.5% over the same period.
Fig: Order book to Sales ratio

Fig: Sales Growth

15000.00

5.00

11916.31

Order book to Sales ratio

3.58

3.49

3.48

3.00
2.42

Rs in mn

12500.00
4.00

2.00

4157.09

2500.00

0.00

0.00
2005-06

2006-07

2007-08

2008-09

Fig: EBITDA margin Growth

2005-06

14.00%

7.00%

12.00%

6.00%

10.00%

5.00%

8.00%
6.00%

2008-09

3.00%
2.00%

2.00%

1.00%

0.00%

0.00%
2006-07

2007-08

4.00%

4.00%

2005-06

2006-07

Fig: Net profit margin Growth

Ne margin

EBITDA margin

6692.82
7500.00
5000.00

1.00

8800.93

10000.00

2007-08

2008-09

2005-06

2006-07

2007-08

2008-09

Source: Company data, Wallfort Research

Initiation coverage
Some of the prestigious ongoing projects of the company:
 Games Village Housing Complex for Commonwealth Games 2010 at New Delhi.
 Remodelling of Dr. S. P. M. Stadium (Talkatora) for Commonwealth Games
2010, New Delhi for CPWD.
 District Court Complex and Advocate Chamber (Composite Work) for P.W.D.,
Govt. of NCT Delhi at Saket, New Delhi.
 Brigade Metropolis Housing Complex, Bangalore.
 Gardenia Hotel for ITC Ltd. at Bangalore.
 Arena Town Centre-Retail Development IT Park at Hyderabad.
 Ranchi Airport Terminal Building for AAI.
 Construction of three Elevated Metro Stations, viz Tollgate, Hsahalli and
Vijaynagar Stations, in Reach-2 for Bangalore Metro Rail Corporation Phase-I.
 Institutional Complex at Rohtak for Directorate of Education, Govt. of Haryana
for RITES.
 ESI Hospital Building, Medical College, Student Hostel, Administration Buildings,
etc. at BPS Mahila Vishwavidyalaya Sonipat (HR)-PH-I for NBCC.
 Metro Depot Civil work for Mumbai Metro One Pvt. Ltd. VAG Corridor
MRTS Project, Mumbai.
 Leela Palace 5-Star Hotel at New Delhi.

Industry Snapshot
Infrastructure sector played a pivotal role in accelerating Indias growth story in the recent
years and one of the key focus areas for development in the country today. More than half
of construction activity is generated from infrastructure sectors, followed by industrial,
commercial and residential sectors. In the Union budget 2009-10, government has
addressed critical importance economic growth by committing significant investments to
infrastructure sector. With the view to accelerate infrastructure development of the country,
the government has planned huge capital spending on infrastructure development. The
government has planned for an estimated capital outlay of Rs.20.27trillion or US$494.43
billion over the 11th five year plan.
Fig: Investment for Infrastructure
700000
600000

585321

Government has
planned capital
outlay of
Rs20.27trillion
under 11th five year
plan

Rs in Cr

500000

472630

400000

384217

300000
200000

317646

267355

100000
0
2007-08

2008-09

2009-10

2010-11

2011-12

Source: Planning Commission, Wallfort Research

Initiation coverage
The government realizes that this cannot happen unless there is significant private-sector
participation.
It is estimated that out of the total outlay on infrastructure sector during 11th five year plan,
29.7% to come from private participation and the balance through public funding.
Fig: 10th Plan

Fig: 11th Plan

30%

18%

82%
70%

Public Sector funding

Public Sector funding

Private investment through PPP

Private investment through PPP

Source: Planning Commission, Wallfort Research

With the Government keen on executing various programmes proposed in the 11th Five
Year Plan, significant order inflows are expected in the Urban Infrastructure space for the
next 3 years. The total investment required for the proposed Urban Infrastructure
Development is estimated to be approximately Rs.1270.25bn, out of which the combined
contribution from Central and State government is expected to be around Rs.1050.00bn.
Areas like Water Supply, Sewerage Treatment, Drainage and Solid Waste Management is
expected to receive significant investments.
Fig: Investment requirement for Urban Infrastructure

Urban Water Supply

16%
42%
42%

Urban Sewerages &

Sewage treatment
Urban Drainage

Source: Company data, Wallfort Research

Initiation coverage
Along with Urban Infrastructure development, there are opportunities in other
infrastructure projects like airport, metro rail & road projects, development of various
Government funded civil projects (universities, healthcare centres, etc). This entails a huge
opportunity for contractors, keeping in mind the size of civil work required for these
projects.
Huge opportunity in
urban infrastructure
space

Looking at the immense infrastructural requirements of the urban cities, the Government
of India has launched Public Private Partnership (PPP) schemes to encourage the private
sector to develop the much-needed infrastructure at a nominal cost. The government has
increased the investment plans significantly in roads, railways, telecoms and irrigation.
The biggest increase in PPP is expected in Roads (from 5% of total investments in the 10th
plan to 36% in the 11th plan), Ports (47% to 74%), Railways (less than 1% to 20%), Gas
(from nil to 32%) and telecom (36% to 67%).
Fig: Investment for Urban Infrastructure
Tenth Plan

Eleventh Plan

Gas
Storage
Airports
Ports
Water Supply and Sanitation
Irrigation (incl. Watershed)
Railways (incl. MRTS)
Telecommunication
Roads and Bridges
Electricity

( R s . in C r.)
0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Source: Planning Commission, Wallfort Research

Increased allocation for Jawahar Lal Nehru National Urban Renewal Mission and
accelerated Irrigation Benefit Programme
Allocation for JNNURM is increased to Rs.129bn for 2009-10 as against Rs.69bn for 200809 while allocation for Accelerated Irrigation Benefit Programme is increased to Rs.350bn
in 2009-10, compared to Rs.200bn for 2008-09. This illustrates government's continued
thrust on urban infrastructure and irrigation projects. This is expected to provide boost to
order books of companies focused on urban infrastructure and irrigation projects.

10

Initiation coverage
Greater flexibility to IIFCL for financing new projects
IIFCL has now been allowed to refinance 60% of bank loans in PPP projects and can
support projects up to Rs1 trillion. IIFCL will also provide long term financial assistance to
a wide range of infrastructure projects such as roads, airports, ports, railways etc. This
would ensure faster implementation of projects through public private partnerships, thereby
opening tremendous scope for infrastructure industry.

Increased allocation for Bharat Nirman and NHDP

Allocation for Bharat Nirman and NHDP has been increased to Rs454bn and Rs160bn in
2009-10 from Rs313bn and Rs130bn in 2008-09, respectively. This is likely to result in
higher order inflows in the roads and highways segment and is expected to provide boost to
order books of companies focused on roads and highways segment.

Some targets for Infrastructure in the Eleventh Plan

Airports

Railways

Modernisation and redevelopment of 4 metro and 35

non-metro airports

Constructing 7 Greenfield airports

Constructing 3 airports in North East

Upgrading CNS/ATM facilities

Constructing Dedicated Freight Corridors between

Mumbai-Delhi and Ludhiana-Kolkatta
10,300 km of new railway lines; gauge conversion of over
10,000 km
Modernisation and redevelopment of 21 railway stations
Introduction of private entities in container trains for
rapid addition of rolling stock and capacity

Source: Planning Commission, Wallfort Research

Metro Rail Projects:

The Planning Commission has accepted the recommendation that all cities with
population more than 3 million should have metro rail system as a policy in its Plan
Document.
In India, there are 8 such cities out of which 2 cities already have metro system so the
unexplored potential for the upcoming projects in remaining 6 cities.
Metro rail projects in India need US$ 20billion over a period of 10 years.
The total network will be in the range of 100-250 KM/CITY depending on the area of
each city.
To assist private players to take up metro projects, the union government has also
established a viability gap funding mechanism, under which financial assistance to the
tune of 20% of the total project cost will be provided. The government is also planning
to raise this share to 30%.

10

11

Initiation coverage
Fig: PPP metro projects in India
Project/route
Delhi Airport Express Link - DMRC
Versova-Andheri-Ghatkopar corridor
- Mumbai metro projects

Total investment
(Rs bn)
40.00

Project
length (km)
22.70

In progress

23.56

11.07

In progress

110.00

31.87

Recently awarded

120.00

71.00

Invited for Re-bidding

Charkop-Bandra-Mankhurd corridor Mumbai metro project

Hyderabad Metro

Current Status

Construction Sector Overview:

The demand for residential, commercial and retail space had almost dried up in FY2009
following the financial crisis. However, the construction market in India has shown some
sign of recovery, mainly in the housing and commercial space to some extent due to
aggressive price-cuts by developers and appropriate steps taken by the government. Owing
to the rapid urbanization and increase in working age population, demand for housing units
will be strong going forward.
As the global and domestic economies show some signs of confidence, investment in
industrial infrastructure is likely to resume. Expansion projects of companies in steel,
aluminium, cement and other manufacturing industries will drive the demand for associated
civil and engineering work. With the formation of a new reform-oriented government,
return of liquidity to the market and an improving employment outlook, we expect the
demand for real estate to revive.
Foreign investment is likely to flow into the real estate and construction sector in India in
the near-term as it has an enormous potential for growth due to the massive unmet housing
demand.
Fig: FDI inflow in Construction and Real estate
FDI inflow

3000
2500

US$ mn

2000

FDI inflow
significant in the
past few years

1500
1000
500
0

Construction sector
Real estate and housing
sector

2005-06

2006-07

2007-08

2008-09

151

985

1,743

2,028

38

467

2,179

2,801

Construction sector

Real estate and housing sector

Source: Department of Industrial policy and Promotion, Wallfort Research

11

12

Initiation coverage
Peer Comparison:

Operating cash flow

positive since past
four years

For the peer comparison, we have selected Simplex Infra, BL Kashyap & Sons Ltd,
Consolidated Construction Consortium Ltd (CCCL) and Unity Infraprojects Ltd (Unity
Infra), which have similar business operations and compete with each other in the
construction and infrastructure segments. Amongst the peer group, Simplex Infra reported
highest top-line in FY2009 whereas ACIL placed at third position in terms of revenue
growth while ACIL was the front runner in the peer group with respect to EBITDA margin
and third in net income margins.
Amongst the peer group, ACIL is placed at second lowest D/E ratio after CCCL while it
has outperformed the competitors by reporting superior ROE and ROCE during FY2009.
One of the encouraging factor of ACIL is its consistency in generating positive operating
cash flow since past four years on account of better working capital management and
thereby reducing its reliance on external debt.

Fig: Peer Comparision : FY 2009 (Rs mn)

Ahluwalia Simplex Infra BL kashyap

Highest ROCE &

ROE in the industry

CCCL

Unity Infra

Total Revenues
y-o-y growth
EBIDA
margin
EBIT
margin
PAT
margin
EPS

12,004.55
35.40%
1,552.03
12.93%
1,072.68
8.94%
572.87
4.77%
9.13

47,420.60
68.63%
4,532.10
9.56%
3,211.90
6.77%
1,234.24
2.60%
24.95

13,924.80
(10.67%)
1,288.28
9.25%
1,077.25
7.74%
672.93
4.83%
32.76

18,413.07
24.77%
1,289.27
7.00%
1,199.79
6.52%
727.98
3.95%
19.70

11,658.67
37.02%
1,493.12
12.81%
1,330.01
11.41%
703.25
6.03%
52.61

D/E
EV/EBITDA
ROE
ROCE

0.52
1.35
37.10%
35.64%

1.39
4.32
13.71%
15.05%

0.56
4.23
16.59%
18.33%

0.38
3.28
13.85%
17.34%

1.15
3.06
18.17%
12.34%

Source: Bloomberg, Wallfort Research

Quarterly Performance Highlights: Q2 10 Snap-shot

Strong operational
efficiency positively
impacted margins

In Q2 10, ACIL reported strong top-line growth of 14.8% y-o-y to Rs3,483.2mn.

EBITDA profit increased 29.3% y-o-y to Rs485.4mn. EBITDA margin increased
157bps y-o-y to 13.9% during the quarter.
Net profit increased significantly by 63.8% y-o-y to Rs237.7mn. Net margin increased
by 204bps y-o-y to 6.8%, primarily due to decline in effective tax rate from 35.7% in
Q2 09 to 33.6% during the quarter.

12

13

Initiation coverage
Fig: Result Snap-shot Q2 10 (Rs mn)
Key financial data

Q2 10

Q 2 09

Y-o-Y

Q1 10

Q-o-Q

Total Revenues
EBITDA
Margin
PBT
Margin
PAT
Margin
EPS

3483.20
485.39
13.94%
357.73
10.27%
237.76
6.83%
3.79

3035.04
375.40
12.37%
225.67
7.44%
145.15
4.78%
2.31

14.77%
29.30%
157bps
58.52%
283bps
63.80%
204bps
64.07%

3056.90
416.98
13.64%
279.52
9.14%
184.36
6.03%
2.94

13.95%
16.41%
29bps
27.98%
113bps
28.97%
79bps
28.91%

Source: Company data, Wallfort Research

Strength of ACIL : Working capital cycle chart

Fig: Working capital cycle in days
90
80

Very efficient in
managing working
capital cycle in the
industry

70
60

58

65

72

75

78

82

50
40
30
20
10
0
FY 2006

FY 2007

FY 2008

FY 2009

FY 2010 E

FY 2011E

Source: Company data, Wallfort Research

ACIL has been very efficient in managing its working capital cycle compared to its
peers historically. Although we anticipate working capital cycle to increase gradually
from 75days in FY2009 to 78days and 82days for FY2010E and FY2011E, respectively,
we believe the company would be in a better position to manage its working capital
requirement compared to its peers.

Comfortable Debt-to-Equity

ACIL has a very comfortable debt-to-equity ratio of 0.52X and interest coverage ratio
of 5.6X at the end of FY2009. In addition, it is consistently generating positive
operating cash flows over the past few years.
A lower D/E ratio gives a competitive edge to the company over its competitors for
raising funds for bidding for high value projects.
With no major capex plans over the immediate future, we expect the company to enjoy
positive cash flow in the near future while reduction in debt-to-equity ratio is expected
to support bottom line expansion.

13

14

Initiation coverage
Fig: D/E and Interest Coverage Ratio
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00

0.52
D/E

0.50

Interest coverage
ratio is expected to
improve further

0.48
0.46
0.44
0.42
FY 2008

FY 2009

FY 2010E

intrest Coverage ratio

0.54

FY 2011E

Year
D/E

Interest coverage ratio

Source: Company data, Wallfort Research

Financial estimations
Order Book to Bill Ratio
Fig: Order Book trend

Opening order book

Add: Order inflow
Less: Revenue during the year
Closing Order book
Order Book to Bill Ratio

FY 2008

FY 2009

FY 2010E

Rs mn
FY 2011E

16220.00
23306.89
8026.89
31500.00

31500.00
21269.04
11336.04
41433.00

41433.00
25462.38
15252.87
52000.00

52000.00
33672.37
18608.50
67500.00

3.92

3.65

3.41

3.63

Source: Company data, Wallfort Research

On the back of strong order book and faster execution of infrastructure projects, we
anticipate sales to grow at a CAGR of 22.0% for the period FY2009 to FY2012E. We
expect ACILs top-line to grow by 28.0% y-o-y to Rs15,359.0mn in FY 2010 and 22.0%
y-o-y to Rs18,727.0 in FY2011.
Fig: Revenue estimation
20000.00
16000.00
Rs mn

12000.00
8000.00
4000.00
0.00
FY 2008

FY 2009

FY 2010E

FY 2011E

Source: Company data, Wallfort Research

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Initiation coverage

We anticipate ACILs EBITDA income to increase by 36.0% y-o-y to Rs2,111.83mn in

FY2010 and 22.0% y-o-y to Rs2,584.34mn in FY2011. The management has been keen
on controlling the operating costs over the past few years, resulting in higher operating
margins. Going forward, the company is expected to sustain the higher margin level.
Hence, we anticipate margins of 13.75% in FY2010 and 13.80% in FY2011.
Fig: EBITDA profit and margin estimates
3000.00

14.00%

2500.00
13.50%
Rs mn

2000.00
1500.00

13.00%

1000.00
12.50%
500.00
0.00

12.00%
FY 2008

FY 2009

EBITDA Profit

FY 2010E

FY 2011E

EBITDA margin

Source: Company data, Wallfort Research

We expect net profit of Rs899.44mn in FY2010 and Rs1122.27mn in FY2011 and EPS
of Rs14.33 and Rs17.88 for FY2010 and FY2011, respectively.
Fig: Net profit and margin estimates

Rs mn

1200.00

7.00%

1000.00

6.00%

800.00

5.00%

600.00

4.00%

400.00

3.00%

200.00

2.00%

0.00

1.00%
FY 2008

FY 2009
Net Profit

FY 2010E

FY 2011E

Net profit margin

Source: Company data, Wallfort Research

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Initiation coverage
Future Plans and Stratgies of ACIL :
ACILs management and infrastructural strengths equip it to meet the disparate challenges
in both the commercial and residential segments of real estate & urban infrastructure.
Forging ahead, it is looking at:

Intensifying focus on BOT projects mainly on multi-level car parking projects and Bus
terminal/Railway terminal/Airport terminal projects.
Building strengths in niche urban infrastructure projects such as Solid Waste
management and Sewage treatment plants.
Entering into strategic alliances/technical collaborations with foreign companies
Venturing into new fast growing sector as such as SEZs, aviation& concrete roads.

Valuation:

DCF value stands

at Rs250 per share

ACIL has seen a steady growth and improvement in margins and profitability in the
past, which we expect to sustain going forward.
At current EPS of Rs11.56 and a price of Rs178.00 the stock trades at a P/E(X) of
15.40, indicating a discount of 16.00% against industry average of 18.40. Going forward
the companys EPS is expected to be Rs.14.33 FY2010 (E) and Rs.17.88 FY2011 (E).
This makes the stock to trade at attractive valuations with a P/E(X) of 12.42 and 9.95
for FY2010 and FY2011 earning at current market price, respectively.
We initiate coverage on the stock with a BUY rating based on our DCF
valuation, with a twelve month target price of Rs.250, indicating an upside of
40.4% from current price level.

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Initiation coverage
Financials
Income Statement
Date End
FY 08
FY 09
Net Sales
8800.93 11916.31
Other Income
64.81
88.24
Total Income
8865.74 12004.55
Expenditure
7738.23 10452.51
EBIDTA
1127.51
1552.03
479.35
Depreciation & amortisation
228.01
EBIT
899.50
1072.68
Interest
118.09
192.13
Profit before Tax
781.41
880.55
307.68
Tax
265.07
Profit After Tax
516.34
572.87
Other Adjustment*
0.00
0.00
Net Profit for the year

FY 10 E
15252.87
105.89
15358.76
13246.93
2111.83
520.00
1591.83
239.29
1352.54
453.10
899.44
0.00

(Rs. mn)
FY 11 E
18608.50
118.60
18727.10
16142.76
2584.34
580.00
2004.34
316.71
1687.62
565.35
1122.27
0.00

516.34

572.87

899.44

1122.27

62.76
8.23

62.76
9.13

62.76
14.33

62.76
17.88

Balance Sheet
FY 08

FY 09

FY 10 E

(Rs. mn)
FY 11 E

Share Capital
Reserves
Networth
Minority Interest
Secured Loans
Unsecured Loans
Total Loan
Deferred Tax Liability
Total Liab.

125.53
1124.47
1249.99
0.00
555.73
9.50
565.23
0.00
1815.22

125.53
1645.77
1771.29
0.00
906.47
8.33
914.80
0.00
2686.10

125.53
2501.27
2626.79
0.00
1302.97
11.83
1314.80
0.00
3941.59

125.53
3579.60
3705.13
0.00
1791.70
18.10
1809.80
0.00
5514.93

Gross Block
Depreciation
Net Block
Capital work-in-progress
Total Fixed Assets
Investment
Goodwill
Current Assets
Current Liability
Provision
Current Liabilities &
Provisions
Net Current Assets
Deferred Tax Assets
Total Net Assets

1811.58
707.52
1104.06
104.24
1208.30
42.41
0.00
4511.09
3871.44
113.17

2638.29
1134.19
1504.09
0.77
1504.86
0.58
13.80
5846.38
4651.06
135.26

3438.29
1654.19
1784.09
0.77
1784.86
0.58
13.80
7212.35
4998.85
209.64

4438.29
2234.19
2204.09
0.77
2204.86
0.58
13.80
8761.41
5372.95
261.58

3984.61
526.48
38.03
1815.22

4786.32
1060.06
106.80
2686.10

5208.49
2003.86
138.50
3941.59

5634.53
3126.88
168.82
5514.93

No of Equity Shares (in mn.)

EPS

as at 31st March

Category
Margin Ratio
EBDITA Margin
Net Profit Margin
Profitability Ratios
ROCE
RONW
ROA
Du Point Analysis
PAT / PBT
PBT / EBIT
EBIT / Net Sales
Net Sales / Total Assets
Total Assets / Equity
ROE
Valuation Ratios
EV/EBITDA
EV/ Net Sales
Leverage Ratios
Debt-Equity Ratio
Turnover Ratios
Fixed Assts
Working Capital
Inventory
Total Assets
Liquidity Ratios
Current Ratio
Quick Ratio
Interest Coverage
Other Ratios
EPS
Book Value per share

Ratio Analysis
FY 08
FY 09

FY 10 E

FY 11 E

12.72%
5.82%

12.93%
4.77%

13.75%
5.86%

13.80%
5.99%

49.55%
41.31%
28.45%

39.93%
32.34%
21.33%

40.39%
34.24%
22.82%

36.34%
30.29%
20.35%

0.66
0.87
0.10

0.65
0.82
0.09

0.67
0.85
0.10

0.67
0.84
0.11

4.88

4.47

3.90

3.40

1.45
41.31%

1.52
32.34%

1.50
34.24%

1.49
30.29%

10.51
1.41

1.23
0.17

6.83
0.69

5.05
0.57

0.45

0.52

0.50

0.49

7.97
5.09
11.65
4.85

7.92
4.88
8.82
4.44

8.55
4.66
8.49
3.87

8.44
4.44
8.35
3.37

1.13
0.94
7.62

1.22
0.94
5.58

1.38
1.04
6.65

1.55
1.16
6.33

8.23
19.91

9.13
28.22

14.33
41.85

17.88
59.03

* Other Adjustment = Share in Profits/(Losses) of Associates (net) + Share of loss

transferred to minority + Preacqusition profits adjusted against goodwill

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Initiation coverage

Wallfort Research is also available on Bloomberg <Code WFSR>

Analyst Name
Manoj Bharadia
Nishit Golchha
Ekta Golchha
Amit K. Sharma
Kalpesh Gothi
Umesh Patel
Anuj Upadhyay
Rohit Gokhale

Email-id
manoj.bharadia@wallfort.com
nishit.golchha@wallfort.com
ekta.golchha@wallfort.com
amit.sharma@wallfort.com
kalpesh.gothi@wallfort.com
umesh.patel@wallfort.com
anuj.upadhyay@wallfort.com
rohit.gokhale@wallfort.com

Disclaimer: This Document has been prepared by Wallfort Research (Wallfort Financial Services LTD).The information, analysis and estimates contained
herein are based on Wallfort Research assessment and have been obtained from sources believed to be reliable. This document is meant for the use of the
intended recipient only. This document, at best, represents Wallfort Research opinion and is meant for general information only. Wallfort Research desk, its
directors, officers or employees shall not in anyway be responsible for the contents stated herein. Wallfort Research expressly disclaims any and all liabilities
that may arise from information, errors or omissions in this connection. This document is not to be considered as an offer to sell, or a solicitation to buy any
securities. Wallfort Research, its affiliates and their employees may from time to time hold positions in securities referred to herein. Wallfort Research or its
affiliates may from time to time solicit from or perform investment banking or other services for any company mentioned in this document.
Disclosure: Wallfort Financial Services Ltd. may hold a position in the stock(s) recommended above.

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