Dilip Buildcon - The best-in-class execution!


(eyesice) #22

(zeeshan syed) #23

https://youtu.be/MEh-3xcPIaY


(zeeshan syed) #24

Can somebody explain:

  1. why Dilip Buildcon doesn’t pay taxes?
    2.What is a Minimum alternative tax(MAT) and why Dilip Buildcon is using it?
    Thanks.

(zeeshan syed) #25

Latest interview of Rohan Suryavanshi…


(santoshj) #26

Just like Dilip Buildcon, IRB also has the same business model. Dilip buildcon has sold its BOT projects to focus on EPC business. IRB is also transferring BOT projects to InvIT which generates cash for IRB. Both are pan india players and both have same opportunity going forward, specially from Bharatmala project.

Still, for the last 3 months, Dilip Buildcon has seen substantial share price increase, whereas IRB is still on the same level. Does anyone know the reason?


#27

Q2 Results: http://www.bseindia.com/xml-data/corpfiling/AttachLive/9793cea9-9099-4e30-b500-82d9cd46c0d8.pdf
Investor Presentation: http://www.bseindia.com/xml-data/corpfiling/AttachLive/b493287b-e17c-4384-b362-588ccf4d704e.pdf


(Mahendra243) #28

Hi Boarders…Is it still a long term bet? given the fact that it has run up a lot in last one year or so? please let me know if it is good to add for 2 to 3yrs?


(zeeshan syed) #29

Definately yes…for one and a half …two years view.

Reasons:

Company has given guiedlines for Rs 7000+ cr revenue this year which at current margins can lead to Pat of 500+cr.I believe this has already been priced in current valuations.But if you are willing to look further down the line,there are multiple triggers going for Dilip Buildcon.

1.Macro economic outlook looks stable for 3-4 years due to bharatmala and more focus on the infrastucture development by the government.Increase in orders by the government.This will reduce competition intensity…which augurs well for all players.
2.Company to bid for Rs.40-50000 cr projects this year…out of which they are confident to get orders worth 10-12000cr.
This gives order visibility of 3x fy18 sales…which is great.
3.Great executers with no sub-contracting,own equipments and large employee base to execute orders.
4.Sold all of its SPVs(all bot projects)to chatwal group for 1600 cr.The proceeds will be used to reduce debt and will be used to invest in HAM projects.
Key Risks:
1.Execution: Watchout closely for execution of orders.Company has a high fixed cost model.Any delays in excution can put serious dent in company’s margins.
2.Balance Sheet: Watchout for changes in debt levels and working capital days.
3.Order Book:Watch for increase in order book yoy.
4.Government:Any slowdown in government ordering can impact the company as it is the biggest buyer(90+%).

Ending thoughts:This is not a buy and forget kind of business.The company has already appreciated 3times and I understand it might consolide at current levels for some time.I also believe that the probability of losing money here for 1+years seems low and it can definately appreciate from these levels if all goes well.
Thanks.

Disc:Invested.


(santoshj) #30

Agree to your points. But all these trigger points stand valid for other companies too, who operate in this sector. More specifically, IRB and KNR. Both have strong balance sheets and pan India presence.


(zeeshan syed) #31

Agreed.The tailwinds are there to benefit all the players who can take advantage of them.

1.I like KNR contructions.Recently they also sold their BOT projects.But I dont understand whay they have to pay Rs.12 lakh each to the board members as sitting fees compared to other companies.
2.IRB seems mostly into BOT segment.BOT is even more capital intensive as you need to pay everything from your pocket and collect revenues through toll collections. In EPC everything is government funded…so there is less risk of execution delays.


(santoshj) #32

KNR had 4 BOT Projects. They sold of 2. Largely they are into EPC business. They also have 25% of order book from Irrigation. Not sure about director fee but the amount is small so it won’t dent profitability.

IRB hived off 7 BOT projects to InvIT. They still have some projects in subsidiaries. But going forward government will announce more projects in HAM and TOT models. So, all players will have the same pie to grab. I don’t think government will come up with BOT based projects in near future.


(sanketkulkarni1987) #33

Can you please share the source of 7000 cr plus guideline by company ?


(santoshj) #34

Hi,

I am not sure from where he got 7000 cr figure. However, here is the link to guideline of Rs. 6500 cr +

http://www.moneycontrol.com/news/business/earnings-business/confident-of-achieving-rs-6500-cr-topline-in-fy18-dilip-buildcon-2438381.html


(zeeshan syed) #35

Because of great Q2 numbers…the company has upped their revenue target to Rs7000 cr plus.

The current orderbook of the company is around Rs14000 cr …out of which the company the company plans to execute about Rs 4000 cr this year.

Source: Q2 Earnings Call.

Thanks.


#36

Perhaps you only posted the video and didn’t listen to the complete interview :slight_smile:
In the interview he says the guidance will go up and they will beat the guidance by 8-10%, which means around 7000Cr.


(Alphin) #37

Got a good feedback from a road company owner about dilip buildcon. Said that he heard that owner is very good and manages all projects directly. Very good at execution.

Disc: not invested and probably will not invest as don’t like the industry.


(zeeshan syed) #38

I attended the concall and the management clearly said they will cross Rs 7000 cr revenue this year.


(Amit Mehta) #39

Any particular reason why you don’t like the industry?

Disc: Invested with small exposure


(santoshj) #40

:stuck_out_tongue: My bad. I just read the text. Didn’t see the video.

But I feel its all factored in price. Thats why the share price saw continuous run from Rs. 600 to Rs. 900. Any update it very limited right now. It will depends when the NHAI call for more bids and DBL wins more projects.


(Alphin) #41

Some factors,

  1. Tender goes to lowest bidder, So no pricing power.

  2. Too many competitors.

  3. High investment required so idling will have its own fixed costs. So they may be forced to take projects at loss also, so buisness is cyclical.

  4. Usually we cant assess quality of work and any legal implications etc.

that being said I myself did invest in IRB some years ago…