ITD Cementation - Robust Order Pipeline, Stable Ebitda Margins Are Key Positives: HDFC Securities

HDFC Securities Retail Research

ITD Cementation Ltd. is one of the key beneficiaries of increasing government focus towards Infrastructure development and upgradation of railways and metro projects and also the strong allocation in the Union Budget is focusing on implementation on both engineering, procurement and construction, civil construction and turnkey institutional projects over next few years.

Its focus on margins and cash flow generation augurs well from a long-term perspective. Over the years, the company has transformed itself into one of the leading EPC players for its expertise in niche areas like marine, metro and complex road projects.

ITD Cementation has grown its order book and revenue at a healthy rate with sustainable margins. The company with its diversified order book and continued growth momentum, and coupled capabilities for robust execution and strong parental support in providing technical knowhow.

ITD Cementation has strong financials and healthy balance sheet as compared to its peer companies which gives also company a competitive advantage in bidding for new big projects and report healthy revenue growth over next few years on account of promising revenues flowing from multiple large projects and smoothness in execution.

We expect revenue/Ebitda/profit after tax to grow at a compound annual growth rate of 26%/43%/65% over FY23–25E.

With the strong quality of orders flowing into the order-book providing strong future outlook for revenues, we revise our earnings multiple enhancing it to 13.75 times for base case valuation and 15 times bull case multiple to company’s FY25 earnings.

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