Shares of Dilip Buildcon gained nearly 11 percent intraday on September 9 amid hope of debt reduction at consolidated level and talk of selling more HAM (hybrid annuity model) assets.
The stock has surged 25 percent in the last 15 days. It was quoting at Rs 421, up Rs 36.40, or 9.46 percent, on the BSE at 1210 hours.
Global brokerage house Citi has maintained buy call on the stock, with a target price of Rs 514 per share, implying 33.6 percent upside from current levels.
"Divestment of HAM projects is in-line with company's strategy of focusing on EPC (engineering, procurement and construction) works. Equity unlocked from HAM project divestment will be deployed towards new projects," the brokerage said.
Citi said company would take up HAM projects only for the EPC component and inflows from Cube is likely to commence in Q1FY21.
On August 31, Dilip Buildcon entered in to agreement(s) with Cube Highways and Infrastructure III Pte Limited for sale of five under construction HAM projects.
The company agreed to sell to Cube its entire shareholding in five projects in a phased manner, in accordance with share holding transfer restrictions set out in the concession agreements executed between the National Highways Authority of India (NHAI) and the project SPVs, and approval of lenders and NHAI.
The equity valuation of the five projects is expected around Rs 702 crore on required equity (equity share capital and promoter's unsecured loan) of Rs 568 crore, it had said in a BSE filing.
Rohan Suryavanshi, Chairman & Managing Director, told CNBC-TV18 that the sale of five projects would reduce the company's consolidated debt by Rs 1,800 crore. The company was also in talks to sell seven more HAM projects.
Dilip Buildcon sees NHAI orders to pick up from October 2019, Citi said.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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