Ahluwalia Contracts (India) Ltd

FUNDAMENTALS VALUATION

AHLUWALIA CONTRACTS (INDIA) LIMITED

31st

January 2011

ANALYTICAL CONTACT

Ms. Revati Kasture +91-22-6754 3465 [email protected]

BUSINESS DEVELOPMENT CONTACTS

MUMBAI

Mr. P. N. Satheeskumar +91-22-6754 3555 [email protected]

KOLKATA

Mr. Sukanta Nag +91-33- 2283 1800 [email protected]

CHENNAI

Mr. V Pradeep Kumar +91-44-2849 7812 [email protected]

AHMEDABAD

Mr. Mehul Pandya +91-79-40265656 [email protected]

NEW DELHI

Ms. Swati Agrawal +91- 11- 2331 8701 [email protected]

BANGALORE

Mr. G. Sundara Vathanan +91-80-2211 7140 [email protected]

HYDERABAD

Mr. Ashwini Kumar Jani +91-40-40102030 [email protected]

CARE EQUITY RESEARCH OFFERS

Independent Research of equities on fundamentals or valuations or both

IPO Grading

White Label Research

Valuation of companies for Institutional Investors, Asset Managers and Corporates

Sector Write-ups for Offer Documents of securities


1 www.careratings.com

EQUIGRADE

EQUIGRADE – Analytical Power for Investment Decisions


Construction

Very Good Fundamentals; Considerable Upside Potential CMP : Rs. 137 / CIV : Rs. 202.00 1

31st

January 2011

CARE Equity Research assigns 4/5 on fundamental grade to

Ahluwalia Contracts (India) Limited (ACIL)

CARE Equity Research assigns fundamental grade of 4/5 to ACIL.

This indicates ‘Very Good Fundamentals’. ACIL is largely present

in civil construction with more than four decades of execution track

record and healthy diversification across sectors, clients and

geographies across India. ACIL’s significant and increasing order-

book of close to Rs. 6,000 crore, with around Rs. 3,500 crore worth

pending to be executed, provides revenue visibility of around two

years. The order pipeline is also expected to remain buoyant in the

short to medium term.

Being primarily into civil construction exposes the company to the

risk of slow-down in the economy, as the order-book is primarily

biased towards the private sector. Any slow-down in the real estate

sector and/or the corporate capital expenditure would hurt the

company in terms of sluggish order flows. However, the company’s

recent foray into the BOT projects and power sector and its

increasing focus in these areas will help it mitigate the said risks and

improve its revenue visibility over the long term. High working

capital cycle, which is the characteristic of this industry, is also a

challenge for the company, as working capital cycle is on a rising

trend.

Valuation

CARE Equity Research assigns valuation grade of 5/5 to ACIL

based on the current Intrinsic Value (CIV) of Rs. 202 as against

Current Market Price (CMP) of 137, indicating ‘Considerable

Upside Potential’ from CMP.

Financial Information Snapshot

(Rs Crore) FY09 FY10 FY11 P FY12 P

Operating Income 1,164 1,568 1,800 2,400

EBITDA 152 179 239 325

PAT (After minority interest) 58 82 95 146

Fully Diluted EPS* (Rs.) 9.1 13.0 15.1 23.3

Dividend Per Share (Rs.) 0.7 0.8 1.0 1.5

P/E (times)

10.5 9.1 5.9

EV/EBITDA (times) 4.5 3.4 2.5

* Calculated on Current Face Value of Rs. 2/- per share

Lakhs 0.41


www.careratings.com 2

EQUIGRADE

Construction: need for built-up space increasing

India is the second fastest growing economy in the world and construction is India’s second largest economic

activity after agriculture. The share of construction sector in India’s GDP inched up to 7.9 per cent in FY10 from

6.8 per cent of GDP in FY01 and construction activity is intrinsic to the growing economy like India.

Construction sector: increasing contribution to GDP

Source: Central Statistical Organization (CSO)

Increasing urbanisation and rising disposable income is translating into a huge potential demand for housing.

Similarly, favourable demographic mix is driving the demand for retail malls, theatres, hospitals, hotels, etc.

Significant corporate capex is driving demand for office spaces, while Government’s spending on infrastructure

also offers opportunity for construction industry. CARE Equity Research believes that the construction sector is

likely to witness real growth of 7 – 8 per cent in the next 4 – 5 years.

ACIL to benefit out of the humungous opportunity in construction industry

CARE Equity Research believes ACIL’s proven track record of more than four decades with diverse experience

across various sectors and various geographies across India would auger well for the company in tapping the

humongous growth opportunity in the construction sector. ACIL has executed spectrum of projects across India in

segments like residential real estate, office spaces, hotels, IT parks, SEZ, hospitals, etc. and this varied experience

would help the company to maintain a buoyant order-book pipe-line. ACIL has been successful in increasing its

order book size largely on account of timely and quality execution of its projects. The company enjoys repeat

orders from many of its clients, which signifies its commendable project execution capabilities. However,

increasing inflationary pressure and increasing interest rates is a cause of concern for ACIL amongst other players

in the industry. Furthermore, execution risks are also inherent in construction business.

FUNDAMENTAL GRADE Very Good Fundamentals 4/5



EQUIGRADE

Completed projects by ACIL

Source: CARE Equity Research

Comfortable order backlog provides revenue visibility for at least next two years

ACIL’s current order back log stands at close to Rs. 6,000 crore, of which close to Rs. 3,500 crore worth orders

are yet to be billed. The quantum of unbilled orders is 2 times its top-line of Rs. 1,800 crore expected to be

achieved in FY11. During H1 FY11, ACIL has won new contracts of Rs. 981 Crore which reflects a Y-o-Y growth

of 66% over the same period previous year. From Rs. 780 crore in FY05, the company’s order book size has

increased at a CAGR of about 47 per cent to Rs. 5,300 crore in FY10 and further to around Rs. 6,000 crore till

date. CARE Equity Research expects the company to add orders worth at least Rs. 2,000 crore in FY11.

ACIL: Trend in order-book


Residential

Commercial

Hotel

Retail

South City, Kolkata

ITC Corporate Office,

Gurgaon Four Seasons, Mumbai

Inorbit Mall, Mumbai

Gurgaon One,

Gurgaon Technopolis, Kolkata

Rennaisance, Mumbai

India Exposition Mart,

G. Noida

DLF Richmond Park,

Gurgaon SEBI Office, Mumbai

Shangri-La, Delhi &

Mumbai

Brigade Orion Mall,

Ludhiana

Brigade Metropolis,

Bangalore

Maruti Corporate

Office, New Delhi

ITC Grand Central,

Mumbai MBD Mall, Ludhiana

La Citadel, Mumbai

Apollo Tyres Corp.

Office, Gurgaon

Hotel Gardenia,

Bangalore

Destination Point, G.

Noida

Common Wealth Games (CWG) Village and up-gradation and renovation of S P M Swimming Pool for CWG



EQUIGRADE

Well diversified order-book with least concentration risk

ACIL’s current order book consists of more than 110 projects, which are at the execution stage at different

locations. The Northern region of India accounts for about 49 per cent of the order-book position, while the East

and Western region accounts for about 20 per cent of the projects respectively. The orders are bagged from

diverse sectors of the economy and no single order forms more than 7 per cent of its total order book. Though the

residential and commercial real estate continue to remain the major contributors to its order-book, the projects

from sectors such as infrastructure, hotels, institutions and hospitals are witnessing increasing trend.

Project diversification


Restriction to civil construction and skew of order-book towards private sector a concern

ACIL is primarily into civil construction, which exposes the company to the risk of slow-down in the economy, as

the order-book is primarily biased towards the private sector. Currently, close to 70 per cent of the orders are

bagged from the private sector, which significantly slow-down in case of compression in the economy. Any slow-

down in the real estate sector and / or the corporate capital expenditure would hurt the company in terms of

sluggish order flows. On the other hand, order-flows form Government, which account for 30 per cent of its order

back-log, are relatively more stable and can provide sizeable opportunities even in the sluggish phase of the

economy.

Focus on diversification affirms de-risking strategy

On the back of its strength and expertise in the civil construction business, ACIL has forayed / planning to foray

into new business ventures such as urban infrastructure, construction of power projects and Built Operate Transfer

(BOT) projects. CARE Equity Research believes such persistent diversification strategies will help the company in

mitigating any slowdown in particular sector(s) and persistently improve its revenue visibility.

BOT 1

Commercial 40

Hospitals 5

Hotels 11

Infrastructure 8

Institutional 10

Power 2

Residential 30

Retail 6

Total 113



EQUIGRADE

ACIL has received a BOT project worth Rs. 72 crore from the Rajasthan State Road Transport Corporation

(RSRTC) to build a bus terminal along with a commercial complex at Kota, Rajasthan with rent sharing agreement,

which increases the visibility of the company’s income flow. With the focus on urban infrastructural projects like

water and waste management, metro railways, airports etc, ACIL is making itself available and capable for backing

new upcoming projects arising out of the increased allocation of funds to the Jawaharlal Nehru National Urban

Renewal Mission (JNNURM) scheme.

During Q3 FY11, ACIL has secured new orders from diverse sectors aggregating to Rs. 580 Crores. Of these,

orders power segment contributed to around Rs. 35 Crores, services segment (electromechanical, plumbing and

fire fighting) worth Rs. 42 Crores and Rs 103 crore order for construction of industrial building.

Backward integration to help in cost mitigation and timely execution

ACIL has six plants to produce ready mix concrete (RMC) with the production capacity of 1,800 cubic meters of

concrete per day with self owned transit of mixers, stationery and book pumps. The company has over seventy five

tower cranes, thirty five batching Plants, boom & concrete Pumps, load excavators, DG sets, passenger cum

material lift, etc and over forty five transit mixers, one of the largest fleet in Northern India. However, the rising

cost of production for the steel and cement manufacturers poses a direct threat to the company.

Comfortable leverage and superior returns

When compared with its peers, ACIL is well placed with a debt-equity ratio of about 0.6 times and an interest

coverage ratio of about 6 times. The lower leverage allows better financial flexibility to the company as the

company does not have to go for any equity dilution and has also resulted into better ROE and ROCE margins. It

also helps the company to capitalize on high growth opportunities without significantly hampering its balance sheet.

Comparison of FY 10 financials

Source: Capitaline, CARE Equity Research

ACIL CCCL BL Kashyap

Debt/Equity (Times) 0.6 0.5 0.8

Interest Coverage (Times) 6.3 4.5 4.1

ROCE (%) 48.5 22.4 8.3

RONW (%) 37.9 16.5 8.2



EQUIGRADE

Working capital cycle to add pressure on margins

Historically, ACIL has been very effective in managing its working capital requirements. The net working capital to

net sales was as low as 10 per cent until FY09, substantially lower when compared to peers in the construction

industry. However, the working capital cycle which averaged around 30 days during FY07 to FY09, has reached to

55 days in FY10. Increased focus on infrastructural and BOT projects has lead to a substantial increase in ACIL’s

working capital requirements. Going ahead, CARE Equity Research believes the company’s working capital

requirement to increase further on account of the company’s diversification plans.

Working Capital Cycle (in days) Projected ROCE and ROE


Reasonable corporate Governance practices

ACIL’s board comprises of 10 directors, of which 5 are non-executive independent directors, 3 are executive

director and 2 are executive promoter directors. This suggests well diversified composition of board with adequate

separation of ownership and management. ACIL is in compliance with the provisions of the Listing Agreement in

respect of corporate governance, especially with respect to broad basing of the Board of Directors and constituting

committees. There are four Board level committees in ACIL- (i) Audit Committee, (ii) Shareholders’/Investors’

Grievances Committee (iii) Remuneration Committee and (iii) Share Transfer Committee. All four committees

are chaired by non-executive independent directors. The board is supported by well experienced senior level

managerial personnel.

Management succession may be challenging

ACIL’s board comprises of four members from the promoter family - Shri Bikramjit Ahluwalia (Promoter),

chairman and managing director (CMD), aged 71 years, Smt. Sudershan Walia (Promoter), Whole Time

Director, aged 63 years, Shri Shobhit Uppal (Family member), Dy. Managing Director and Shri. Vikaas Ahluwalia

(Family member), Whole Time Director. Though the management succession seems to be a challenge for the

company, it has developed a team of well qualified professionals having vast experience in the industry to lead the

company forward.



EQUIGRADE

CARE Equity Research values ACIL at Rs. 202 per share

According to CARE Equity Research, the Current Intrinsic Value (CIV) of ACIL stands at Rs. 202 per share. This

translates into Enterprise Value (EV) of Rs. 1,220 crore valuing the entity at 5 times the EBITDA for FY11E.

Thus, ACIL has ‘Considerable Upside Potential’ from the current market price of Rs 149 per share.

The CIV is calculated based on Discounted Cash Flow model

CARE Equity Research has arrived at CIV of the stock on the basis of Discounted Cash Flow (DCF) model. The

overall firm Weighted Average Cost of Capital (WACC) is calculated based on our long term assumptions of cost

of financing summarized in below table.

• CARE Equity Research has used Free Cash Flow (FCF) methodology to arrive at the firm value, as ACIL’s

business is (working) capital intensive in nature.

• The forecasted FCF is as per CARE Equity Research estimates.

• Terminal value is arrived at by using Gordon Growth Model.

• Terminal value forms 89 per cent of the firm’s total equity value, which appears to be reasonable.

ACIL: Valuation Based on Discounted Cash Flows

VALUATION GRADE Considerable Upside Potential 5/5

Item Value Basis

Risk Free Rate 8.25% 10 year G-sec yield expected at year end FY11

Equity Risk Premium 6.00%

Beta 0.7

Cost of Equity 12.66%

Cost of Debt 12.00% Long term cost of debt

Tax Rate 33.00% Long term tax rate

D/E Ratio 1.00 Long term target D/E ratio

WACC 10.35%

Terminal growth rate 3.00%



EQUIGRADE


ACIL: Sensitivity Analysis – Share price


Weighted Average Cost of Capital (%)

9.0% 9.5% 10.3% 11.0% 11.5%

Term

inal

Year

Gro

wth

Rat

e 2.0% 220 203 180 165 155

2.5% 235 216 190 174 163

3.0% 253 232 202 183 171

3.5% 275 250 216 195 181

4.0% 301 271 231 207 192

(Rs crore except per share data)

2010-11 2011-12 2012-13 2013-14 2014-15 Terminal

Value

PAT 95 146 205 280 384 384

DTL 27 33 50 71 100 100

Depreciation 54 67 81 98 117 117

Interest (1-T) 24 31 39 47 58 58

Capex -171 -151 -137 -153 -195 -195

Increase in WC -46 -136 -203 -268 -347 -347

Free Cash Flow -18 -10 34 76 118 118

Discount Rate 0.97 0.88 0.80 0.73 0.66 0.66

PV of FCF -18 -9 27 55 78

PV of Terminal

Value 1,087

Total Discounted Value of Firm 1,220

Less: Net Debt (FY10) -47

Present Value of Equity 1,268

No of Equity Shares (crore) 6

CIV 202



EQUIGRADE

The CIV of Rs. 202 per share is 5.1 times the FY11E EBITDA of Rs. 239 crore

The CIV of ACIL at Rs. 202 per share as arrived by CARE Equity Research is 5.1x FY11E EBITDA of 239

crore. This seems reasonable if compared with its peers, given the higher RoCE earned by the company.

ACIL: Peer comparison


ACIL CCCL BL Kashyap

Operating Income 1,568 1,976 1,060

EBITDA 179 194 94

EBITDA Margin 11.4% 9.8% 8.9%

Net Profit 82 92 39

RoCE 48% 23% 12%

Enterprise Value 813 1,174 996

EV/EBITDA (FY10) 4.5 6.0 10.6

Total Order Book 5,300 4,500* 4,000*

* approximate as at Sep - 10



EQUIGRADE

Company Background

Incorporated in 1979 and subsequently converted into a public limited company in 1990, Ahluwalia Contracts

India Limited (ACIL) is engaged in the construction business for over four decades. ACIL has executed diverse

projects across sectors like residential spaces, office spaces, retail malls, hotels, hospitals, IT parks, SEZ, industrial

buildings, etc. across geographies in India. Mainly involved into the construction business, ACIL also offers total

integrated engineering and design turnkey solutions to its clients in the public and private sector. ACIL through its

100% subsidiary Ahlcon Ready Mix Concrete Private Limited (ARMC) operates into the business of Ready Mix

Concrete (RMC), which as well makes the company backward integrate itself in its core business of construction

activities. The company has successfully completed various projects in the residential, commercial, educational

institutes, retail, hotels, industrial plants and hospitality sectors.

Some of the major projects completed/under execution by ACIL include the following:

Birsa Munda Airport, Ranchi, Jharkhand: Construction of new integrated passenger terminal building.

Bangalore Metro Rail Project: Construction of three elevated metro stations in Phase I.

Mumbai Metro One: Civil work for VAG corridor MRTS project.

IDBI and PNB Bank: Construction of office building at the Bandra-Kurla complex in Mumbai

Vedanta Aluminium Ltd: Civil and allied works of aluminium smelter projects at Jharsuguda Orissa.

Leela Palace Hotel: Five star hotel Leela Palace Hotel at Chanakyapuri in New Delhi.

Common Wealth Village: One of the largest residential projects awarded to any construction company in the

country.

Tata Housing Project: Bangalore etc.

Development of a bus terminal in Kota, Rajasthan, forays ACIL’s new venture into the Built Operate Transfer

(BOT) space. ACIL is also looking into fresher areas of growth like sewage water treatment, civil work for power

plants and other infrastructure related activities which will enable the company to take advantage of the increase in

investments in the sector.

Business Segments

COMPANY BACKGROUND

ConstructionUndertake all

kinds of construction

work from pilling to pre-cast-pre stressing work

Plumbing

Provides services for

water supply, sanitary & fire

fighting works

RMC

Produces over 1800 cubic

meters of concrete a day

with self owned transit mixers

DesignExamplary in-house design

cell comprising of design

experts

Aluminium (AL)Undertakes

design supply &

installation of AL doors, windows,

glass facades etc.

ElectromechanicalProvide supply,

installation, testing & commisioning

services for

electrical wor



EQUIGRADE

Source: Company presentations

ACIL’s order book size as on 30th

September 2010 stands at Rs. 5005.47 Crores, which constitutes around 30% of

the orders backed from the government and the rest from the private sector. As on same date, the estimated

balance work in hand is around Rs. 3,217 crore.

ACIL’s growth in Order book position:

Source: Company Annual Reports, CARE Equity Research

Sector-wise order book mix:

The residential and commercial segment contributes to about 35% and 21% share of the balanced order book

respectively. ACIL’s foray into new business ventures such as BOT and power sector are adding to new orders

contributing around 2% and 4% of the balanced order book respectively. With respect to the geographical

locations, the order book is well diversified and consists of about 113 projects from across the segments.

Order book position as on 30th

Sept’10: Sector-wise and geographical location wise:




EQUIGRADE

Promoters & Management

Source: Company Annual Report

Name Designation Education Experience

Shri Bikramjit Ahluwalia Chairman & M.D Civil Engineer Over 4 decades of Experience

Shri Shobhit Uppal Dy. M.D Electrical Engineer Over 17 years of Experience

Smt. Sudershan Walia Director N.A Over 3 decades of Experience

Shri Vikas Ahluwalia Director Civil Engineer Over 15 years of Experience

Shri Vinay Pal Director Civil Engineer Over 25 years of Experience

Directors Non-Executive and Independent

Shri Arun Kumar Gupta Director C.A., I.C.W.A Over 3 decades of Experience

Shri S.K. Chawla Director Engineer Over 3 decades of Experience

Shri Balbir Singh Director Civil Engineer Over 4 decades of Experience

Dr. Sushil Chandra Director M.A - PhD Over 4 decades of Experience

Shri S.S. Kohli Director N.A Over 4 decades of Experience



EQUIGRADE

Industry Overview

Construction is an essential part of country’s infrastructure and industrial development. Broadly, construction can

be classified into 3 segments – Infrastructure, Industrial and Real Estate. Infrastructure segment involves

construction projects in different sectors like roads, rails, ports, irrigation, power, telecom etc. Construction

industry, with its backward and forward linkages supports various other industries such as cement, steel, paint, pipe,

electric appliance, tiles & fittings and construction equipment.

Construction industry is working capital intensive and highly fragmented – large number of unorganised players

work on a sub-contracting basis. Construction component in a particular project varies from sector to sector because

of varied level of civil construction activities involved in different projects. Revenue of a construction company is a

function of order book size and order book tenure (execution period). Strong order book position (in multiples of

sales) provides long term revenue visibility to the firm. A company having higher proportion of low gestation period

projects in its order book enjoys higher conversion rate of order backlog and in turn faster growth in revenues.

Profitability of the construction company depends upon the order mix of the company and construction costs.

Complex projects which are technology savvy like construction of nuclear power plant fetch higher profit margins as

compared to low-technology projects like road construction

Industry Outlook

Healthy economic growth, significant corporate capex, favourable demographics and easily available housing

finance has lead to the robust growth of the Indian construction industry. Increasing urbanization and rising

disposable income is translating into a huge potential demand for residential real estate, while significant corporate

capex is driving the commercial as well as industrial construction space. The favourable demographic pattern is

driving the construction of hotels and restaurants, cinemas, malls and retail outlets.

With the recovery in the economic growth, buoyant outlook and increased impetus of the government on

infrastructure development and housing for the low-income group, CARE Research foresees huge opportunity for

the construction industry going forward. Persistently rising household income levels and significant capital

expenditure plan of the Indian corporate sector would continue to drive the industry’s growth going forward.

SNAPSHOT OF THE INDUSTRY



EQUIGRADE

Income Statement

(Rs Crore) FY08 FY09 FY10 FY11 P FY12 P

Operating Income 880 1,164 1,568 1,800 2,400

EBITDA 113 152 179 239 325

Depreciation and amortisation 23 46 33 54 67

EBIT 90 106 146 185 258

Interest 12 18 21 35 46

PBT 78 88 125 150 212

Ordinary PAT (After minority interest) 52 58 82 95 146

PAT (After minority interest) 52 58 82 95 146

Fully Diluted Earnings Per Share* (Rs.) 8.2 9.1 13.0 15.1 23.3

Dividend 5 5 6 7 10

* Calculated based on ordinary PAT on Current Face Value of Rs. 2/- per share

Balance Sheet

(Rs Crore) FY08 FY09 FY10 FY11 P FY12 P

Net worth (incl. Minority Interest) 125 178 253 341 496

Debt 57 76 124 200 265

Deferred Tax Liability / (Asset) -4 -13 -15 -15 -15

Capital Employed 178 241 362 526 746

Net Fixed Assets 121 121 128 139 143

Investments & Others 4 1 8 115 195

Loans and Advances 33 46 54 80 93

Inventory 54 95 92 125 145

Receivables 226 309 334 395 505

Cash and Cash Equivalents 116 90 171 182 194

Current Assets, Loans and Advances 451 579 712 848 1,023

Less: Current Liabilities and Provisions 398 461 486 575 615

Total Assets 178 241 362 526 746

Ratios

FY08 FY09 FY10 FY11 P FY12 P

Growth in Operating Income 31.5% 32.3% 34.7% 14.8% 33.3%

Growth in EBITDA 50.4% 35.2% 17.6% 33.0% 36.3%

Growth in PAT 65.6% 11.8% 41.7% 16.2% 53.7%

Growth in EPS 65.6% 11.0% 42.7% 16.2% 53.7%

EBITDA Margin 12.8% 13.1% 11.4% 13.3% 13.5%

PAT Margin 5.9% 5.0% 5.2% 5.3% 6.1%

RoCE 57.0% 50.6% 48.5% 40.8% 39.8%

RoE 50.5% 38.2% 37.9% 31.1% 33.9%

Net Debt-Equity (times) -0.5 -0.1 -0.2 0.1 0.1

Interest Coverage (times) 9.5 8.4 8.5 6.8 7.1

Current Ratio (times) 1.1 1.3 1.5 1.5 1.7

Inventory Days 22 30 21 25 22

Receivable Days 94 97 78 80 77

Price / Earnings (P/E) Ratio 10.5 9.1 5.9

Price / Book Value(P/BV) Ratio

3.4 2.5 1.7

Enterprise Value (EV)/EBITDA 4.5 3.4 2.5

Source: Company, CARE Equity Research

FINANCIAL STATISTICS



EQUIGRADE

THIS PAGE IS INTENTIONALLY

LEFT BLANK



EQUIGRADE

CARE Equigrade Grid (CEG)

Through CEG, CARE Equity Research addresses two critical factors considered by an investor while investing in a

particular company’s equity shares:

1. Fundamentals: Whether the company is fundamentally sound with respect to its business, its financial position, its

management and its prospects.

2. Valuation: What is the Current Intrinsic Value (CIV) of the stock and how it compares vis-a-vis its Current

Market Price (CMP)

These factors are answered assigning quantitative grades to both these parameters. CEG is the snapshot of

‘Fundamental Grade’ and ‘Valuation Grade’ assigned by CARE Equity Research.

Fundamental Grade

This grade represents how sound the company is fundamentally, vis-à-vis other listed companies in India. This grade

captures:

1. Business Fundamentals and Prospects

2. Financial Soundness

3. Management Quality

4. Corporate Governance Practices

The grade is assigned on a five-point scale as under:

CARE Fundamental Grade Evaluation

5/5 Strong Fundamentals

4/5 Very Good Fundamentals

3/5 Good Fundamentals

2/5 Modest Fundamentals

1/5 Weak Fundamentals

Valuation Grade

EXPLANATION OF GRADES



EQUIGRADE

This grade represents the potential value in the company’s equity share for the investor over a 1 year period. The

Current Intrinsic Value (CIV) or the price arrived by CARE Equity Research on fundamental basis is compared with

the current market price (CMP) of the stock and the grade is assigned based on the gap between CIV and CMP of the

stock.

The grade is assigned on a five-point scale as under:

CARE Valuation Grade Evaluation

5/5 Considerable Upside Potential

(>25% from CMP)

4/5 Moderate Upside Potential

(10-25% from CMP)

3/5 Fairly Priced

(+/- 10% from CMP)

2/5 Moderate Downside Potential

(Negative 10-25 from CMP)

1/5 Considerable Downside Potential

(<25% from CMP)

Grading determination is a matter of experienced and holistic judgment, based on relevant quantitative and qualitative factors of

the company in relation to other listed companies.

DISCLOSURES

Each member of the team involved in the preparation of this grading report, hereby affirms that there exists no conflict of

interest that can bias the grading recommendation of the company.

This report has been sponsored by the company.

DISLCLAIMER

This report is prepared by CARE Research, a division of Credit Analysis & REsearch Limited [CARE]. CARE Research has taken

utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain or

from sources considered reliable. However, neither the accuracy nor completeness of information contained in this report is

guaranteed. CARE Research operates independently of ratings division and this report does not contain any confidential

information obtained by ratings division, which they may have obtained in the regular course of operations. Opinions expressed

herein are our current opinions as on the date of this report. Nothing in this report can be construed as either investment or any

other advice or any solicitation, whatsoever. The subscriber / user assumes the entire risk of any use made of this report or data

herein. CARE specifically states that it or any of its divisions or employees have no financial liabilities whatsoever to the subscribers

/ users of this report. This report is for personal information only of the authorised recipient in India only. This report or part of it

should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person, especially

outside India or published or copied for any purpose.

Published by Credit Analysis & REsearch Ltd., 4th Floor Godrej Coliseum, Off Eastern Express Highway, Somaiya

Hospital Road, Sion East, Mumbai – 400 022.

CARE Research is not responsible for any errors or omissions in analysis/inferences/views or for results obtained from the use of

information contained in this report and especially states that CARE (including all divisions) has no financial liability whatsoever to

the user of this product. This report is for the information of the intended recipients only and no part of this report may be

published or reproduced in any form or manner without prior written permission of CARE Research.



EQUIGRADE

Credit Analysis & REsearch Ltd. (CARE) is a full service rating company that offers a wide range of rating and grading services

across sectors. CARE has an unparallel depth of expertise. CARE Ratings methodologies are in line with the best international

practices.

CARE Research

CARE Research is an independent research division of CARE Ratings, a full service rating company. CARE Research is

involved in preparing detailed industry research reports with 5 year demand and 2 year profitability outlook on the industry

besides providing comprehensive trend analysis and the current state of the industry. CARE Research also offers research that

is customised to client requirements. CARE Research currently offers reports on more than 21 industries that include Cement,

Steel, Aluminium, Construction, Shipping, Ship-building, Commercial Vehicles, Two-Wheelers, Tyres, Auto Components,

Pipes, Natural Gas, Retail, Sugar, etc. CARE Research now offers independent research of equities through its product

‘EQUIGRADE’.

CREDIT ANALYSIS & RESEARCH LTD

HEAD OFFICE |Mr. P. N. Satheeskumar | Cell: +91-9820416004 | Tel: +91-22-6754 3555 | E-mail:

[email protected]

4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai - 400 022 |

Tel: +91-022- 6754 3456 | E-mail: [email protected] | Fax: +91-022- 6754 3457

KOLKATA | Mr. Sukanta Nag | Cell: +91-98311 70075 | Tel: +91-33- 2283 1800/ 1803, 2280 8472 |

E- mail: [email protected] | 3rd Flr., Prasad Chambers (Shagun Mall Bldg), 10A, Shakespeare Sarani, Kolkata -700 071

CHENNAI | Mr. V Pradeep Kumar | Cell: +91 9840754521 | Tel: +91-44-2849 7812/2849 0811 | Fax: +91-44-2849 0876 |

Email: [email protected] | Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai - 600 002

AHMEDABAD | Mr. Mehul Pandya | Cell: +91-98242 56265 | Tel: +91-79-40265656 | Fax: +91-79-40265657 |

E-mail:[email protected] | 32, Titanium, Prahaladnagar Corporate Road, Satellite, Ahmedabad - 380 015.

NEW DELHI | Ms. Swati Agrawal | Cell: +91-98117 45677 | Tel: +91- 11- 2331 8701/ 2371 6199 |

E-mail: [email protected] | 710 Surya Kiran, 19 K.G. Road, New Delhi - 110 001.

BANGALORE | Mr. G. Sundara Vathanan | Cell: +91 98860 24430 | Tel:+91-80-2211 7140 |

E-mail: [email protected] | Unit No. 8, I floor, Commander's Place, No. 6, Raja Ram Mohan Roy Road,

(Opp. P F Office), Richmond Circle, Bangalore - 560 025.

HYDERABAD | Mr. Ashwini Kumar Jani | Cell: +91-91766 47599 | Tel: +91-40-40102030 |

E-mail: [email protected] | 401, Ashoka Scintilla | 3-6-520, Himayat Nagar | Hyderabad - 500 029

ABOUT CARE

Ahluwalia Contracts (India) Ltd

Documents

Transcript of Ahluwalia Contracts (India) Ltd