Recommendation from Construction Sector

This section gives a recommendation of a stock having stock price below Rs 150 with sound fundamentals and expected to give handsome returns over a one-year time horizon. [EasyDNNnews:PaidContentStart]

B L Kashyap: Reaching Greater Heights

HERE IS WHY
✓ Order book of ₹3,005 crore
✓ Expanding opportunities in realty sector
✓ Making good profit 

The Indian real estate sector is experiencing an exciting period of growth, driven by exceptional presales across various segments and significant inventory expansion. As millions migrate to cities seeking better opportunities and lifestyles, the need for residential housing is rising dramatically. Another crucial factor is the increasing disposable income of individuals. As their financial stability increases, so do their aspirations for better living spaces. Owing to this, our low price scrip recommendation for this issue is B L Kashyap and Sons (BLK), a leading construction, infrastructure and civil engineering company in India. 

BLK has a diverse portfolio across various industries, including IT campuses, commercial spaces, malls, hotels, residential complexes, institutions, factories, manufacturing facilities, healthcare and transportation. The company also undertakes turnkey projects, showcasing its proficiency in setting up power generation plants, power transmission and distribution systems, integrated rail and metro systems, residential buildings, and townships. It boasts an impressive clientele, including industry giants like DLF, Embassy, Hero MotoCorp, ITC, Maruti Suzuki, Raheja Builders, Tech Mahindra, Salarpuria, Microsoft, IBM, Adobe and Blackstone. Having successfully completed projects such as the Park Hyatt Goa Resort and Spa and the Airport Terminal T1 D building at the IGI Airport, Delhi, BLK continues to thrive with ongoing projects in H1FY24. Its notable projects include Embassy REIT Tech Village-Parcel 8, Gomti Nagar Lucknow Railway Station, and DLF Downtown Block 4, among others. As of H1FY24, the company’s order book stands at nearly ₹3,005 crore compared to ₹2,402 crore in FY23, out of which 62 per cent is allocated to the commercial segment, followed by infrastructure and industrial (30 per cent) and residential (8 per cent). 

To support its growth, BLK has planned a capital expenditure of approximately ₹25 crore in FY24, demonstrating an increase from the capex of ₹8 crore in FY22 and ₹19 crore in FY23. For the quarter ended September 30, 2023, the company posted consolidated revenue of ₹326.62 crore compared to ₹292.70 crore from the previous year’s corresponding quarter, signifying a YoY growth of 11.59 per cent. On a sequential basis, its revenue rose by 29.24 per cent. 

The EBITDA grew by 16.45 per cent YoY at ₹30.08 crore from ₹25.83 crore while on a sequential basis the EBITDA grew by 10.34 per cent. The net profit doubled to ₹12 crore compared to ₹5.74 crore from the previous year’s corresponding quarter while on a sequential basis the net profit rose by 20.60 per cent. The EBITDA margin improved 38 bps YoY and fell 158 bps QoQ to 9.2 per cent. Its net profit margin improved by 171 bps YoY and fell 26 bps QoQ at 3.7 per cent. 

On a trailing 12-month basis, the shares of BLK are trading at a PE of 35.2 times, which is slightly on the higher side compared to its long-term historical median of 28.5 times. The stock trades at 3.98 times its book value and has a PEG ratio of 2.20 times. It has interest coverage of over 2.25 times over the debt to equity of 0.66 times. The company has an order book greater than 2.7 times its TTM revenue, which gives visibility in the revenue. Furthermore, with its diverse portfolio and strategic initiatives, BLK remains a key player shaping the landscape of construction and infrastructure in India. Considering these factors, we recommend BUY.

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