Dilip Buildcon shares extend gains, zoom 37% in just two sessions; here's what fuelling the surge

Shares of Dilip Buildcon rose sharply in Wednesday's trade, extending their gains for the fourth straight session. The stock jumped 14.17 per cent today to hit a day high of Rs 231.70 over its previous close of Rs 202.95. Considering today's high price, it has gained 36.97 per cent in back-to-back sessions. The stock has jumped 45.09 per cent from its 52-week low of Rs 159.70, a level seen on May 19 this year. Yet, it was trading 11.14 per cent lower from its one-year high of Rs 260.75, hit on August 2, 2022.

Today, the scrip was last seen trading 6.09 per cent higher at Rs 215.30 in late deals, erasing more than half of the gains recorded in early trade. Around 12.91 lakh shares changed hands today on BSE, which was nearly 18 times compared to the two-week average volume of 72,000 shares. Turnover on the counter stood at Rs 28.10 crore, commanding a market capitalisation (m-cap) of Rs 3,143.62 crore.

The company's net loss widened by 31.80 per cent on a year-on-year (YoY) basis. It reported a consolidated net loss of Rs 73.16 crore in the March 2023 quarter (Q4 FY23) as compared to Rs 55.51 crore a year earlier. However, total income rose by 6.84 per cent to Rs 2,851.39 crore in Q4 FY23 from Rs 2,668.90 crore in the year-ago period.

Brokerage AnandRathi has assigned a 'Buy' call on the counter with a one-year target price of Rs 255.

"De-levering and a comforting pace of execution were two key notables from Dilip's Q4 FY23. With around Rs 220 crore, sequentially, lower net debt in Q4 to Rs 2,380 crore, FY23 de-levering was at Rs 360 crore. Operating profitability was subpar, but the progressively depleting margin-drag older order book and rising contribution from recent orders suggest potential. Recognising that aggressive revenue growth could necessitate further working capital, it looks to grow in a measured manner. FY24 inflow guidance too appears to conform to this. This, and continuing efforts to prune working capital cycle and the restrained guidance to capex suggest cash flow generation is still a priority. Monetisation efforts to continue," the brokerage stated.

On the technical setup, the stock was last seen trading higher than the 5-day, 20-, 50-, 100- and 200-day moving averages. The counter's 14-day relative strength index (RSI) came at 79.93. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 13.38. It has a price-to-book (P/B) value of 0.64.

"Reduction in debt has led to a sharp uptrend in the stock price. Investors should be booking profits at current levels and wait for a dip near support of Rs 180 to initiate fresh buy positions for better returns," said AR Ramachandran from Tips2trades.

The scrip has an average target price of Rs 234, Trendlyne data showed, suggesting a potential upside of 9 per cent. It has a one-year beta of 1.17, indicating high volatility on the counter.

Dilip Buildcon is one of the leading full-service infrastructure companies with construction capabilities in roads and bridges, mining water, sanitation, sewage, dams, irrigation, industrial, commercial and residential buildings.

Meanwhile, Indian equity benchmarks fell sharply in late deals, dragged by banks, financials, metals and energy stocks.