Dilip Buildcon's Track Record and Outlook

Dilip Buildcon
Infrastructure & Construction | DBL IN
Institutional Equity Research | India

On track September 12, 2019
 Moderating revenue portends well for OCF generation; contained

borrowings on lower negative FCF reduces leverage ratio to 1.1x
 Has got ~75% of proceeds from Shrem deal (pending receivables/

investment by Shrem ~Rs3bn/Rs1.5bn)
 Recent deal with Cube reduces equity funding pressure; key

monitorables remain new orders, reduction in leverage/working capital
 Maintain BUY with TP of Rs601 (10xFY21e EPS; 1xP/Bv on investment)
Numbers don’t lie

Moderating growth portends well for cash generation as WC remains under control:
The roads and construction business is, by nature, a negative cash flow business given the
thin profit margin under a high-capex, WC-heavy model especially during the high growth
phase. Thus for DBL, as growth moderated to 17.7% in FY19 (from 52% in FY18) lower
incremental working capital (reduced from Rs8.1bn to 6.2bn) coupled with rising interest
expenses (added back in OCF) led to doubling of OCF generated (~60% of EBITDA).
However, high capex given robust orderbook and finance costs led to a negative FCFF
(Post intt)/PAT of 15%. Though DBL generated positive OCF in FY19, high capex/HAM
investments led to negative FCF, resulting in an increase in net debt (Refer Exhibit 6).
Source: Bloomberg, SSLe
Reading between the lines
Decoding the Shrem deal: The Shrem deal, valued at Rs16bn, has two components:
Rs11.8bn to be received in cash by DBL, and Rs4.22bn to be invested by Shrem in assets Financial Summary
as equity. The total cash actually received till Q1FY20 is Rs8.77bn, so Rs3.03bn is pending
as receivables. Shrem’s investment of Rs4.22bn is actually being routed through DBL (it
will give cash to DBL, and the latter will invest it in SPVs). The pending investment by
Shrem is Rs1.50bn. We have tried to break it down further SPV wise and tried to trace
proceeds in the annual report (Refer Exhibits 7,8, & 9). Post the Shrem deal, DBL also
recently concluded a deal for its 5 u/c HAM projects too (Refer report- Done deal:
Compulsion but timed right).
SAP implemented; benefits to accrue: In early FY19, DBL implemented the SAP HANA
– ERP for its common database, central repository, real-time procure to pay, financial
tracking, supply chain, fleet movement & maintenance, project planning, execution, client
billing, payroll & HR, etc. SAP has helped integrate business operations covering all
functions and departments and will result in tight checks and controls on project execution
including procurement, payment, billing, and cost efficiencies as better reporting helps the
management to take better decisions (for e.g., supplier-wise transactions helps DBL
negotiate better rates for raw materials such as cement, bitumen, steel, diesel, etc).
The bigger picture
Order inflows remain key though pressure on equity reduces: DBL’s order inflow
(~Rs61bn) remained tepid in FY19 relative to its huge OB base. The company’s ability to
replenish its fast-depleting order book is the key to future growth – the management
estimates Rs120-150bn of inflow in FY20 as ordering in roads could become strong again
in FY20. DBL has also entered into an SPA with Cube for selling stake in five HAM projects
from a portfolio of 12 U/C assets. This should ease pressure on DBL’s balance sheet (in
terms of leveraging) as the equity requirement for its U/C HAM portfolio will reduce to
~Rs13.4bn, and it could reduce even more if the remaining seven projects are also
monetized. The key monitorables remain order inflows and any reduction in
leverage/working capital cycle.
Key changes in BOD/ Senior management
Santosh Hiredesai
CFO: After Chief Financial Officer Mr Vaibhav Rawat resigned, DBL appointed Mr Raja Analyst - Infrastructure, Power, Aviation
Ghosh (General Manager – Accounts and Finance) as Interim CFO until the company filled +91 22 4227 3450
the vacancy separately. Later, it appointed Mr Radhey Shyam Garg (Vice President - santosh.hiredesai@sbicapsec.com
Finance) as CFO with effect from 10 Dec’18 in place of Mr Raja Ghosh and designated him
as as KMP of company. On 1 Jun’19, it designated Mr Garg as President & CFO. Mayank Goel
Additional Director: On 30 Mar’19, DBL appointed Ms Ratna Dharashree Vishwanathan Associate - Infrastructure
as additional director under the category of an Independent Woman Director for a term of 5 +91 22 4348 7236
years. mayank.goel@sbicapsec.com
SBICAP Research on Bloomberg SBICAP <GO>, www.emis.com Please refer to our disclaimer given at the last page.
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Dilip Buildcon SBICAP Securities Ltd
Key points from MDA
 MoRTH reaches record high construction: “In December 2018, Ministry of Road
Transport and Highways (MoRTH) touched a record 31.87 km per day average of
national highway construction.”
 FDI for construction development surges: “As per the information from the
Department of Industrial Policy and Promotion (DIPP), between April 2000 and
December 2018, the Foreign Direct Investment on projects related to construction
development amount to US$24.91bn.”
 Impressive project qualifications: “We (DBL) possess the qualifications required to
bid for a project up to the ticket size of Rs25.65bn for BOT, Rs28.50bn for HAM and
Rs12.54bn for EPC.”
Interesting titbits
 No private banks banking with DBL? Interestingly, all the financial institutions and
banks that the company deals with are government entities. Unlike other industry
players, none of DBL’s bankers are private banks/FIs.
 Not all directors are part of some committee: Though not mandated by the
Companies Act, it is also interesting to note that of the 10 directors (including seven
independent directors) on DBL’s Board, three independent directors (Vijay Chhibber,
Malay Mukherjee and Ratan Vishwanathan) and one whole-time director (Seema
Suryavanshi) are NOT part of ANY of the five mandatory board committees. Further, Mr
Satish Chandra Pandey (independent director) is the chairman of ALL the five
mandatory board committees. (Refer exhibit 11).
 Manufacturing sand leads to Rs1.9bn saving annually: “DBL manufactures sand for
construction purposes. Not only does this method reduce dependence on government
approved sand, it also relieves any adverse impact on the river banks. Concrete with
manufactured sand has huge techno-commercial benefits. DBL’s manufactured sand
has completely replaced natural sand, saving up to Rs1.87bn per year.”
 Drones and GPS monitoring used for tracking resources: “Machines, fuel fuel
usage, and consumables are tracked through new technologies providing mapping and
vehicle location history with real time alerts and notifications. Using this technology,
DBL is able to guide drivers and operators, enabling fuel savings of ~25%. Drones
monitor progress at site, potential safety hazards, compute volumetric calculation, and
keep pilferage and leakage under check.”
Exhibit 1: Company snapshot

Particulars Details
Project Execution track-record 30 yrs
No of Equipments ow ned 11741
No of employees 35,153
Gross Block Rs 33.8 bn
States w here projects have been executed 17
Early completion bonus till FY19 Rs 4.4 bn
Orderbook FY19 Rs 211.7 bn
Revenues FY19 Rs 91.2 bn
EBITDA FY19 Rs 16.0 bn
EBITDAM FY19 17.6%
PAT FY19 Rs 7.6 bn
PATM FY19 8.3%
Source: Company, SSL
santosh.hiredesai@sbicapsec.com | mayank.goel@sbicapsec.com September 12, 2019 | 2

Exhibit 2: Shareholding pattern (Mar’19) Exhibit 3: Promoter shareholding (Mar’19)
Category of Shareholders No. of Shares % Prom oter No. of Shares % holding % pledged
Promoters & promoter group 10,34,41,359 75.6% Dilip Suryavanshi 5,56,73,487 40.7 13.7
Mutual Funds 86,61,381 6.3% Seema Suryavanshi 1,19,04,200 8.7 -
Banks, FI, Insurance Co, Instt holdings 1,09,016 0.1% Devendra Jain 3,58,63,572 26.2 7.6
FIIs 1,32,36,728 9.7% Suryavanshi Family Trust 100 0.0 -
Private Corporate Bodies 27,74,563 2.0% 10,34,41,359 75.63 21.28
Indian Public (Individuals & HUFs) 74,94,569 5.5% Source: Company, SSL
NRIs/OCBs /Foreign Nationals 4,05,267 0.3%
Any other 6,46,885 0.5%
13,67,69,768 100%
Exhibit 4: Differentiated business model
Focusing on roads with diversification in mining.

More focus on government contracts especially central agencies/govt Has successfully improved exposure to
govt projects, and reduced
dependence on private projects. As of
Equipment ownership Skilled manpower 30 Sep’14, 48/ 17/ 35% of the projects
Backward integration Minimal subcontracting were from the central govt/ state govt/
private players; this improved to
- Careful selection Criteria - Efficient project planning and management 85/15% from central /state
- Clustering for efficiency & profitability - Cost-effective procurement governments in FY19
- Robust contract Management - Equipment tracking and management for efficiency

- Project tracking to minimize delays - Continuing focus on driving operating efficiency
Exhibit 5: Key numbers from annual report

Particular (Rs m n) FY18 FY19
Balance Sheet (Rs m n)

Scaled-up business operations
Retention, Withheld Money, Security & Other Deposits 4,692 8,997 resulted in money getting blocked in
Current Advances (from Customers) 2,327 4,467 customer advances and
retention/withheld money
Loan from prom oters 104 181

-Mr. Dilip Suryavanshi 39 64
-Mr. Seema Suryavanshi 4 10
-Mr. Devendra Jain 60 107
Interest Rate ranges on borrow ings:-

Secured - Term Loan from banks 9.00% to 13.50% Interest remained reasonable during
the year at 8.5%-13.5%.
Secured - Term Loan from Financial Institution 8.50% to 13.50%
Cash Flow (Rs m n) As growth moderated to 17.7% in

FY19 (from 52% YoY) lower add WC
Change in Working Capital (8,109) (6,196) coupled with rising interest expenses
Capex (4,242) (5,704) (added back in OCF) led to doubling of
OCF generated (~60% of EBITDA).
Undertook high capex (Rs5.7bn) in

FY19 anticipating robust execution

Exhibit 6: Analysis of cash generated

Rs m n FY13 FY14 FY15 FY16 FY17 FY18 FY19
Operating Activities
PAT 2,509 1,943 1,637 2,208 3,609 6,355 7,607
Depreciation 709 788 1,179 1,835 2,274 2,750 3,202
Working Capital deployment (4,808) (3,362) (2,895) (3,498) (2,966) (8,109) (6,196)
In FY19, OCF generated
Interest (financing) 1,048 1,551 2,587 3,814 4,162 4,644 5,299 (Rs9.6bn) was ~60% of EBITDA.
Other adjustments 14 (358) (127) (91) (542) (1,448) (333) Unlike previous year, significant
scale-up in business operations
Cash flow /(used) from operations (528) 563 2,383 4,268 6,537 4,192 9,579 was not followed by increased WC
requirements, resulting in OCF
being higher than PAT
Investing Activities
Capex (852) (1,699) (6,682) (4,156) (4,884) (4,242) (5,704)
Investments (340) (841) (928) (65) (1,708) (317) (2,446)
Cash flow /(used) from invt activites (1,192) (2,540) (7,610) (4,221) (6,592) (4,560) (8,150)
Financing Activities
Equity raised - - - - 4,300 - -
Debt raised/(repaid) 2,361 3,681 9,654 2,488 (5) 5,650 4,306
Interest paid (1,048) (1,551) (2,587) (3,814) (4,162) (4,644) (5,299)
Dividend (incl. tax) (10) (11) (12) (7) (4) (165) (165)
Other adjustments 10 6 26 3 3 2 4
Cash flow /(used) from fin activities 1,313 2,124 7,081 (1,329) 132 843 (1,154)
OCF / EBITDA (%) (11.2) 12.0 40.8 53.4 65.9 29.9 59.7
OCF / PAT (%) (21.0) 29.0 145.5 193.3 181.1 66.0 125.9
Despite positive OCF, capex and

FCFF / EBITDA (%) (29.2) (24.2) (73.7) 1.4 16.7 (0.4) 24.2 debt servicing resulted in
FCFF (post Intt) / PAT (%) (90.1) (122.4) (384.2) (147.4) (69.8) (69.1) (15.3) negative FCFE

Decoding the Shrem deal

Exhibit 7: Subsidiary wise summary of investments
Total Shares trnfd to
Sr Mode of FY16 FY17 FY18 FY19
Assets sold to Shrem Type Equity Shrem (%)-
no Investm ent (Rs m n) (Rs m n) (Rs m n) (Rs m n)
(Rs m n) FY19 end
Equity 287 287 75 75
1 DBL Nadiad Modasa Tollw ays Ltd Complete- Annuity 572 74% Debt 178 278 188 -
Assets Held for Sale - - 11 -
Equity 160 160 - -
2 DBL Bankhlafata Dongaw a Tollw ays Ltd Complete- Annuity 317 85% Debt 53 19 2 -
Assets Held for Sale - - 48 24
Equity 200 200 - -
3 DBL Jaora Sailana Tollw ays Ltd Complete- Annuity 410 85% Debt - - 0 -
Equity 65 65 17 17
4 Suryavanshi Infrastructure Pvt Ltd Complete- Toll 137 0% Debt 16 170 272 -
Equity 100 100 - -
5 DBL Sardarpur Badnaw ar Tollw ays Ltd Complete- Annuity + Toll 268 85% Debt 208 192 8 -
Equity 210 210 - -
6 DBL Silw ani Sultangan Tollw ays Ltd Complete- Annuity + Toll 362 85% Debt - - 46 -
Equity 78 78 - -
7 DBL Sitamau Suw asara Tollw ays Ltd Complete- Annuity + Toll 182 85% Debt 24 15 0 -
Equity 210 210 - -
8 DBL Mundi Sanaw ad Tollw ays Ltd Complete- Annuity + Toll 375 85% Debt 171 173 137 -
Equity 320 320 - -
9 DBL Uchera Nagod Tollw ays Ltd Complete- Annuity + Toll 358 85% Debt - - 0 -
Equity 200 200 - -
10 DBL Ashoknagar-Vidisha Tollw ays Ltd Complete- Annuity + Toll 227 69.99% Debt - - 0 -
Equity 260 260 - -
85%
11 DBL Tikamgarh Now gaon Tollw ays Ltd Complete- Annuity + Toll 330 Debt 26 137 95 -
*post BS date
Equity 806 806 - -
12 DBL Betul Sarni Tollw ays Ltd Complete- Annuity + Toll 810 0% Debt 205 306 175 -
Equity 1 118 - -
13 DBL Hata Dargaw on Tollw ays Ltd Complete- Annuity + Toll 271 0% Debt 0 68 130 -
Equity 1 294 - -
14 DBL Patan Rehli Tollw ays Ltd Complete- Annuity + Toll 668 48.89% Debt 0 216 406 -
Equity 1 1,102 1,122 1,122
15 Jalpa Devi Tollw ays Ltd Complete- Toll 2200 0% Debt 4 152 610 60
Assets Held for Sale - - 1,078 1,078
Equity 1 110 138 138
16 DBL Mundargi Harapanahalli Tollw ays Ltd Complete- Annuity 293 0% Debt - 132 192 267
Assets Held for Sale - - - -
Equity 1 84 181 181
17 DBL Hassan Periyapatna Tollw ays Ltd Complete- Annuity 362 0% Debt - 23 125 239
Equity 1 80 160 160
18 DBL Hirekerur Ranibennur Tollw ays Ltd Complete- Annuity 321 0% Debt - 123 184 263
Equity - - 1 96
19 DBL Mahagaon Yavatmal Highw ays Pvt Ltd Under Cons.- Hybrid 1156.3 0% Debt - - 623 612
Equity - - 1 1
20 DBL Yavatmal Wardha Highw ays Pvt Ltd Under Cons.- Hybrid 1034.6 0% Debt - - 531 948
Equity - - 1 1
21 DBL Wardha Butibori Highw ays Pvt Ltd Under Cons.- Hybrid 1113.7 0% Debt - - 563 835
Equity - 0 0 153
22 DBL Tuljapur Ausa Highw ays Ltd Under Cons.- Hybrid 856 0% Debt - 0 - 79
Equity - 1 1 1
23 DBL Kalmath Zarap Highw ays Ltd Under Cons.- Hybrid 805 0% Debt - 21 403 561
Equity - 5 712 712
24 DBL Lucknow Sultanpur Highw ays Ltd Under Cons.- Hybrid 2846 0% Debt - 29 722 1,742
Equity 2,898 4,689 2,408 2,656
Total investm ent in assets sold to Debt 886 2,054 5,413 5,606
16,275
Shrem by DBL Assets Held for Sale - - 2,961 2,758
Total investm ent 3,784 6,742 10,781 11,019

Exhibit 8: Tracing Shrem proceeds in annual report (Rs mn)
Particulars FY18 FY19
Money received by DBL for its ow n investments 5,700 9,150

Money received for investments to be made on behalf of Shrem 320 1,860
Total m oney received by DBL from Shrem 6,020 11,010
Tracing in Annual Report

Advance Received against sale of equity in subsidiaries (Other non current liabilities in BS)- (A) 4,064 7,408
Direct Sale of Shares (am ount knocked off from invt and cash increased- no im pact in Liabilities)- (B) 1,640 1,886
DBL Uchera Nagod Tollways Limited 224 272
DBL Sitamau Suwasara Tollways Limited 54 66
DBL Silwani Sultanganj Tollways Limited 147 179
DBL Sardarpur Badnawar Tollways Limited 70 85
DBL Patan Rehli Tollways Limited 171 171
DBL Nadiad Modasa Tollways Limited 201 212
DBL Mundi Sanawad Tollways Limited 147 179
DBL Jaora Sailana Tollways Limited 140 170
DBL Bankhlafata Dongawa Tollways Limited 112 136
DBL Ashoknagar-Vidisha Tollways Limited 140 140
Profit booked on sale of these above shares 234 276
Adj in invt on behalf of Shrem (Cash received) / Net Loans repaid by SPV from Shrem proceeds
320 1,705
(knocked off from Loans given and cash increased- no im pact in Liabilities)- (C)
DBL Tuljapur Ausa Highways Limited 320 320
DBL Uchera Nagod Tollways Limited - -116
DBL Sardarpur Badnawar Tollways Limited - 178
DBL Sitamau Suwasara Tollways Limited - -2
DBL Bankhlafata Dongawa Tollways Limited - -48
DBL Jaora Sailana Tollways Limited - -170
DBL Ashoknagar-Vidisha Tollways Limited - -40
DBL Silwani Sultanganj Tollways Limited - 45
DBL Mundi Sanawad Tollways Limited - 122
DBL Patan Rehli Tollways Limited - 381
DBL Tikamgarh Nowgaon Tollways Limited - 89
DBL Nadiad Modasa Tollways Limited - 228
Suryavanshi Infrastructure Private Limited - 272
DBL Hata Dargawon Tollways Limited - 136
DBL Betul Sarni Tollways Limited - 311
Total (A + B + C) 6,024 10,999


Exhibit 9: Latest deal summary (1QFY20)
Am ount Received Pending
Particulars
(Rs m n) (Rs m n) (Rs m n)
For 18 BOT Projects (com pleted)

- Total amount invested by DBL 8,140 7,160 980
For 6 HAM Projects (2 com pleted; 4 u/c)

- Amount invested by DBL (26% of equity of Rs7.88bn) 2,050 - 2,050
*to be paid by Shrem post COD of projects
- For the amount invested by DBL on behalf of Shrem's portion 1,610 1,610 -
*Though as per deal, DBL was to invest only Rs2.05bn i.e. 26% ; and Rs5.83 bn i.e 74% was by
Shrem. However by the time deal concluded, of this Rs5.83bn to be invested by Shrem, DBL had
already invested Rs1.61bn in excess. For which it is entitled to reimbursement.
Cash Receivable by DBL 11,800 8,770 3,030
For 6 HAM Projects (2 com pleted; 4 u/c)

- Actual amount to be invested by Shrem (74% of Rs7.88bn less Rs1.61bn invested by DBL) 4,220 2,720 1,500
* This amount to be invested is routed through DBL to SPVs. It is not a receivable by DBL. - - -
Am ount to be invested by Shrem 4,220 2,720 1,500
Total 16,020 11,490 4,530


Board of Directors, Auditors and Corporate Governance

Exhibit 10: Board of Directors, and key management personnel
Rem uneration Attendance
Nam e Designation Qualifications Experience
Salary Sitting/Prof fees in BM
Board of Directors
- 35 yrs of exp in construction business
B.E. (Civil), Rani
Chairman and - President of MP Builders Association.
Dilip Suryavanshi Durgavati University, 16,00,00,000 - 100%
Managing Director - liaises w ith various dept of the govt & also overlooks
Jabalpur
processes including tendering, bidding & planning.
- 20 yrs of exp in construction business
- w as professor at MG College, Bhopal & SV Mahavidyalaya.
Whole-time B.E. (Civil), Vikram
Devendra Jain - conversant w ith overall affairs incl F&A, costing & budgeting. 18,00,00,000 - 100%
Director & CEO University, Ujjain
and looks after project-implementation along w ith the quality of
w ork, ensures timely completion
B.A (Hons), Ranchi - 20 yrs of exp in construction business
Whole-time
Seema Suryavanshi Women’s College, - actively participates in the CSR activities 2,00,00,000 - 100%
Director
Ranchi. and handles the administration of the Company.
- 40 yrs of exp in govt services & State/PSUs

Independent - retired as the Chief Secretary, Madhya Pradesh.
Aditya Vijay Singh B.Sc (Physics- Hons) - 2,40,000 63%
Director - w as also the Chairman of Narmada Valley Development
Authority and the State Election Commissioner of MP.
- 28 yrs of exp in architectural & site engineering services
Independent B.E. (Civil), RGP - actively participates in the CSR activities
Ashw ini Verma - 4,00,000 100%
Director Vishw avidyalaya, Bhopal - is a partner of AV & Associates and has previously w orked
in various capacities in many similar firms.
- 33 yrs of exp in architecture & interior designing & is partner
of Amogh Kumar Gupta and Associates.
- retired as the Chief Secretary, MP & has w orked w ith EP&CO,
Independent M.Sc (Public Health),
Amogh Kumar Gupta Bhopal & TPC of Narmada Valley Development Authority. - 4,00,000 100%
Director MANIT, Bhopal
- has been associated w ith Indian Institute of Architects,
Council of Architecture, Board of Governors of School of
Planning & Architecture.
B.E (Civil), Government - is a retired Government Servant
Satish Chandra Independent
College of Engineering & - has previously w orked as Secretary w ith the Public Works - 3,55,000 88%
Pandey Director
Technology, Raipur. Department, GoMP for 38 years.
- is a retired Civil Servant w ith over 37 years of Public Service
Independent IAS, 1978 batch of in the Indian Administrative Services
Vijay Chhibber - 2,00,000 71%
Director Manipur-Tripura Cadre - has served as Secretary of MoRTH w ith additional charge of
Chairman, NHIDCL
- 41 yrs of exp in banking including venture funding, broking.

- received Certificate of Honorary Fellow ship from IIBF
Independent M.Sc (Physics- Hons),
Malay Mukherjee - has w orked on various key assignments like Chairman of the - 2,50,000 88%
Director Banaras Hindu University
Board of IFCI, IFCI Factors, IFCI Infra dev, Central Bank of India,
Nabil Bank and Tourism Finance Corporation of India Limited.
- has an extensive experience in sectors like strategy building,

Ratna Dharashree Independent M.A (English), Lucknow microfinance, project management, HR and Fin management.
- 25,000 100%
Vishw anathan Director University - has Diploma in Environment & Third World Dev from London.
- belongs to the 1987 batch of the IA&AS
Key Managem ent Personnel
Chief Financial
Vaibhav Raw at* - 7,56,242 - NA
Officer
Chief Financial MBA, CA Inter, CWA

Raja Ghosh# 25,63,368 - NA
Officer Inter
Chief Financial
Radhey Shyam Garg@ Chartered Accountant 17,70,074 - NA
Officer
CS & Compliance
Abhishek Shrivastava Company Secretary 28,56,158 - NA
Officer
Total 36,98,15,842 (~5% of FY19 PAT)
* Mr. Vaibhav Raw at has resigned from the post of Chief Financial Officer w .e.f. May 15, 2018.
# Mr. Raja Ghosh has resigned from the post of Chief Financial Officer w .e.f. December 10, 2018.
@ Mr. Radhey Shyam Garg (Vice President - Finance) has been appointed as Chief Financial Officer w .e.f. December 10, 2018 and designated as the KMP and further designated as President
& Chief Financial Officer w .e.f. June 01, 2019

Exhibit 11: Details of Board committees, meetings and attendance
Mandatory Com m ittees
Nam e Designation Audit Nom & Rem CSR Stakeholder Group Gov
Attendance
Com m ittee Com m ittee Com m ittee Relat. Com m Com m ittee
Dilip Suryavanshi Chairman & MD Member - Member Member - 100%

Devendra Jain Whole-time Director & CEO Member - Member Member - 100%
Seema Suryavanshi Whole-time Director - - - - - -
Aditya Vijay Singh Independent Director Member - - - - 71%
Ashw ini Verma Independent Director Member Member Member Member Member 100%
Amogh Kumar Gupta Independent Director Member Member Member Member Member 100%
Satish Chandra Pandey Independent Director Chairman Chairman Chairman Chairman Chairman 94%
Vijay Chhibber Independent Director - - - - - -
Malay Mukherjee Independent Director - - - - - -
Ratna D Vishw anathan Independent Director - - - - - -
No of Meetings in FY19 7 4 2 4 1
Attendance of m em bers 93% 100% 100% 100% 100% 97%
Non-Mandatory Com m ittees

Nam e Designation Business Dev Lending & Business
Risk m gnt Borrow ing Attendance
& Adm in Investm ent Responsibility
Dilip Suryavanshi Chairman & MD Chairman Chairman Chairman Chairman - 100%
Devendra Jain Whole-time Director & CEO Member Member Member Member - 100%
Seema Suryavanshi Whole-time Director - - Member - - 100%
Aditya Vijay Singh Independent Director - - - - Member 100%
Ashw ini Verma Independent Director Member - - - - 100%
Amogh Kumar Gupta Independent Director Member - - Member - 100%
Satish Chandra Pandey Independent Director - - - Member Chairman 100%
Vijay Chhibber Independent Director - - - - - -
Malay Mukherjee Independent Director - - - - - -
Ratna D Vishw anathan Independent Director - - - - - -
Karan Suryavanshi Head - Business Dev - Member - - - 100%
Bharat Singh President - Member - - Member 100%
Kundan Kumar Das AGM- Business Dev - Member Member - - 100%
Pradeep Suryavanshi - - Member - - - 100%
Raja Ghosh AVP- Finance & Accounts - Member Member - Member 100%
Radhe Shyam Garg President & CFO - Member - - - 100%
No of Meetings in the year 2 26 30 4 0
Attendance of m em bers 100% 100% 100% 100% -
Exhibit 12: Expertise and areas of operation of BOD

Areas of Business Accounts & Business Corporate Corporate Risk
Engineering IT
operation/expertise Develop. Finance strategy Mngt Governance Mngt
No of direcors skilled
5 5 5 6 6 2 4 3
(out of 10)
Exhibit 13: Changes in Board of Directors in FY19

Director Nam e Designation Date Change
Ratna D Vishw anathan Independent Director 30-Mar-19 Appointment as an additional director
Vaibhav Raw at CFO 15-May-18 Resignation
Raja Ghosh Interim CFO 10-Dec-18 Appointment as interim CFO
10-Dec-18 Appointment as Full-time CFO
Radhey Shyam Garg CFO
01-Jun-19 Further designated as President & Chief Financial Officer

Exhibit 14: Board of Directors: Composition
Executive
Chairman, 1
Executive
Director, 2
Independent
Director, 7
Exhibit 15: Details of various auditing firms

Area Nam e of Entity, Location Rem arks
M/s Mukund M. Chitale & Co, Mumbai
Statutory Auditors Unchanged, To continue AGM to be held in CY2022.
M/s MSG & Associates, Bhopal
Secretarial Auditors M/s Piyush Bindal & Associates, Bhopal Unchanged, Re-appointed for the FY20
Cost Auditors M/s Yogesh Choursia & Associates, Bhopal Unchanged, Re-appointed for the FY20
Internal Auditors M/s Adalatw ale and Bhagw at, Bhopal Unchanged, Re-appointed for the FY20
Exhibit 16: Expenditure on Corporate Social Responsibility

Particulars Rs m n
Average Net Profit of the Company for last 3 F.Y.: 4,241.5
Prescribed CSR Expenditure: 85.8
Details of CSR spent during the financial year 2018-19:
a) Total amount to be spent for financial year: 85.8
Amount unspent will be carried
b) Amount spent for the financial year: 10.8 forward and spent in next FY
c) Amount unspent for the financial year: 75.0
Exhibit 17: Change in credit ratings

Rating Previous Current
Instrum ent
Agencies Rating Rating
Cash Credit Care CARE A+/STABLE CARE A/STABLE
Non Fund Based Limit Care CARE A1 -
Cash Credit Crisil CRISIL A+/STABLE CRISIL A/STABLE
Non Fund Based Limit Crisil CRISIL A1 -
Non Convertible Debentures Crisil CRISIL A+/STABLE CRISIL A/STABLE
Commercial Paper Crisil CRISIL A1 -
Cash Credit India Ratings IND A+/STABLE IND A+/NEGATIVE
Non Fund Based Limit India Ratings IND A1 -
Cash Credit Brickw ork BWR AA-/STABLE -
Non Fund Based Limit Brickw ork BWR A1+ -
Commercial Paper Brickw ork BWR A1+ -

Order inflows and order book breakup

Exhibit 18: Projects won in FY19
Aw ard Project Cost
Project Nam e Type State Client/Party
Date (Rs m n)
Bellary to Byrapura Section of NH-150A HAM Karnataka NHAI 01-Jun-18 8,875

Nagpur Mumbai Super Communication Expressw ay EPC Maharashtra MSRDC 30-Aug-18 16,980
Overburden Removal – Jayant OCP Project Singrauli Mining Madhya Pradesh NCL 05-Sep-18 7,175
MDO Contract of Pachhw ara Central Coal Block Mining Jharkhand PSPC: 11-Aug-18 5,847
Navnera Barrage EPC Rajasthan WRD, Kota 04-Oct-18 5,366
BhopalMetro betw een AIIMS and Subhash Nagar Metro Madhya Pradesh MPMRC 04-Oct-18 2,206
Indore Metro betw een ISBT and Mumtaj Bag Colony Metro Madhya Pradesh MPMRC 04-Oct-18 2,044
Overburden Removal – Samalesw ari OCP Project Mining Odisha MCL 06-Dec-18 8,478
Saoner-Dhapew ada-Kalmeshw ar-GondKhairi EPC Maharashtra NHAI 09-Mar-19 4,286
61,257
Exhibit 19: Projects completed in FY19

Project Cost Date of Early days
Project Nam e Type State Client/Party Length
(Rs m n) com pletion com pleted
Sargaon-Bilaspur EPC Chhattisgarh NHAI 3,681 35.49 20-May-18 73
Guna-Biaora Bot Toll MP NHAI 7,150 93.5 18-Jun-18 260
Allahabad – UP/MP Border EPC UP MoRTH 4,000 166.88 31-Jul-18 -
Majalgaon - Kaij EPC Maharashtra MoRTH 2,880 57.52 24-Oct-18 280
Kalmab – Ralegaon - Wadki EPC Maharashtra MoRTH 2,925 50.28 09-Oct-18 210
Rayachoty - Kadapa EPC Andhra Pradesh MoRTH 1,980 51.35 10-Sep-18 60
Kundalia Major Multipurpose DAM MP WRD M.P. 2,700 - 14-Dec-18 141
Ghagra Bridge to Varanasi EPC Uttar Pradesh NHAI 6,743 58.62 04-Feb-19 177
Exhibit 20: Details of HAM portfolio

Our Project Project Appointed
Project Nam e State Client Progress
Cost (Rs m n) Length (km ) Date
DBL Rew a Sidhi Highw ays Pvt. Ltd. Madhya Pradesh NHAI 8,152 15.4 14-Dec-18 25%
DBL Chandikhole Bhadrak Highw ays Pvt. Ltd. Odisha NHAI 12,613 74.5 16-Dec-18 21%
DBL Byrapura Challakere Highw ays Pvt. Ltd. Karnataka NHAI 6,708 50.0 31-Dec-18 37%
DBL Anandpuram Anakapalli Highw ays Pvt. Ltd. Andhra Pradesh NHAI 17,717 50.8 04-Jan-19 23%
DBL Mangloor Highw ays Pvt. Ltd. Telangana NHAI 7,461 49.0 12-Apr-19 14%
DBL Borgaon Watambare Highw ays Pvt. Ltd. Maharashtra NHAI 8,448 52.0 22-Apr-19 10%
DBL Banglaore Nidagatta Highw ays Pvt. Ltd. Karnataka NHAI 20,048 56.2 14-May-19 7%
DBL Sangli-Borgaon Highw ays Pvt. Ltd. Maharashtra NHAI 8,768 41.4 23-May-19 3%
DBL Mangalw edha Solapur Highw ays Pvt. Ltd. Maharashtra NHAI 9,480 56.5 23-May-19 4%
DBL Gorhar Khiratunda Highw ays Pvt. Ltd. Jharkhand NHAI 7,644 39.5 19-Jul-19 2%
DBL Nidgatta -Myosre Highw ays Pvt. Ltd. Karnataka NHAI 20,926 61.1 Aw aited -
DBL Bellary Byrapura Highw ays Pvt. Ltd Karnataka NHAI 11,076 55.0 Aw aited -

Exhibit 21: Order book: Segment wise breakup Exhibit 22: Order book: State wise breakup
West Bengal Madhya
Mining 1% Pradesh
Metros 14% 12%
2%
Urban dev.
Karnataka
0.3%
21%
Irrigation
3%
Maharashtra
Odisha 26%
8%
Jharkhand
Roads 6% Telangana
81% Goa
AP Uttar 4%
4%
6% Pradesh
9%
Exhibit 23: Revenue breakup: Segment wise (FY19)
Urban dev. Mining

1% 10%
Irrigation
0.5%
Roads
88%

Financial charts
Exhibit 24: Order book robust; B2B ~2.5x Exhibit 25: Revenue grew at a CAGR of ~51%
420 4 120 200
315 3 90 150
(Rs bn)
(Rs bn)
(%)
(x)
210 2 60 100
105 1 30 50
0 FY20e 0 0 0
FY21e
FY18
FY13
FY14
FY15
FY16
FY17
FY19
FY13
FY16
FY10
FY11
FY12
FY14
FY15
FY17
FY18
FY19
FY20e
FY21e
Order Backlog OB/Sales (x) Net Sales YoY%
Exhibit 26: EBITDA & PAT margins to remain stable

24 26 8 16
18 23 6 12
(Rs bn)
(Rs bn)
(%)
(%)
12 20 4 8
6 17 2 4
0 14 0 0
FY20e
FY21e
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY12
FY15
FY10
FY11
FY13
FY14
FY16
FY17
FY18
FY19
FY20e
FY21e
EBITDA EBITDA Margin Adjusted PAT Net Margin
Exhibit 27: Working capital days remain high at 125 days Exhibit 28: Leverage high at 1.1x (to reduce going further)
180 2.8
135 2.1
90 1.4
45 0.7
0 0.0
FY10
FY10
FY12
FY19
FY15
FY19
FY11
FY13
FY14
FY15
FY16
FY17
FY18
FY20e
FY21e
FY11
FY12
FY13
FY14
FY16
FY17
FY18
FY20e
FY21e
Working Capital Days Net Debt to Equity (x)

Financials
Income Statement Balance Sheet
Y/E Mar (Rs m n) FY18 FY19 FY20e FY21e Y/E Mar (Rs m n) FY18 FY19 FY20e FY21e
Net sales 77,459 91,182 106,816 117,846 Cash, Bank bal. & Curr Invt. 1,613 1,888 1,876 1,434
growth (%) 52.0 17.7 17.1 10.3 Other Current assets 47,871 60,092 70,115 78,952
Operating expenses 63,431 75,138 88,065 97,300 Investments 8,230 13,015 14,811 18,201
EBITDA 14,028 16,044 18,751 20,546
growth (%) 41.4 14.4 16.9 9.6 Net fixed assets 18,290 20,482 18,758 18,840
Depreciation &amortisation 2,750 3,202 3,974 4,418 Goodw ill & intangible assets 29 341 341 341
EBIT 11,278 12,842 14,777 16,128 Other non-current assets 8,432 10,491 10,148 12,915
Other income 155 464 321 523 Total assets 84,465 106,309 116,048 130,683
Interest paid 4,644 5,299 6,024 6,329
Extraordinary/Exceptional items (152) 43 0 0 Current liabilities 24,796 28,679 33,850 38,161
PBT 6,637 8,050 9,074 10,322 Borrow ings 29,412 35,763 37,251 40,406
Tax 434 400 2,722 3,406 Other non-current liabilities 5,686 9,822 6,715 7,133
Effective tax rate (%) 6.5 5.0 30.0 33.0 Total liabilities 59,895 74,264 77,816 85,700
Net profit 6,203 7,649 6,352 6,916
Minority interest Share capital 1,368 1,368 1,368 1,368
Reported Net profit 6,203 7,649 6,352 6,916 Reserves & surplus 23,203 30,677 36,864 43,615
Non-recurring items 152 (43) 0 0 Shareholders' funds 24,571 32,044 38,232 44,983
Adjusted Net profit 6,355 7,607 6,352 6,916 Minority interest 0 0 0 0
growth (%) 76.1 19.7 (16.5) 8.9 Total equity & liabilities 84,465 106,309 116,048 130,683
Key Financials ratios Cash Flow Statement

Y/E Mar FY18 FY19 FY20e FY21e Y/E Mar (Rs m n) FY18 FY19 FY20e FY21e
Profitability and return ratios (%) Pre-tax profit 6,637 8,050 9,074 10,322
EBITDAM 18.1 17.6 17.6 17.4 Depreciation 2,750 3,202 3,974 4,418
EBITM 14.6 14.1 13.8 13.7 Net Interest 4,517 5,079 5,703 5,806
NPM 8.2 8.3 5.9 5.9 Chg in w orking capital (8,109) (6,196) (4,852) (4,526)
RoE 29.5 26.9 18.1 16.6 Total tax paid (1,504) (1,604) (2,722) (3,406)
RoCE 19.7 18.4 13.2 12.8 Other operating activities (99) 1,048 (0) (0)
RoIC 19.9 18.2 13.3 12.6 Operating CF 4,192 9,579 11,176 12,613
Per share data (Rs) Capital expenditure (4,242) (5,704) (2,250) (4,500)
O/s shares (mn) 136.8 136.8 136.8 136.8 Chg in investments (442) (2,662) (9,574) (3,390)
EPS 46.5 55.6 46.4 50.6 Other investing activities 125 216 8,442 (2,244)
FDEPS 46.5 55.6 46.4 50.6 Investing CF (4,560) (8,150) (3,381) (10,134)
CEPS 66.6 79.0 75.5 82.9 FCF (50) 3,875 8,926 8,113
BV 179.6 234.3 279.5 328.9
DPS 1.0 1.0 1.0 1.0 Equity raised/(repaid) - - - -
Debt raised/(repaid) 5,650 4,306 1,488 3,155
Valuation ratios (x) Interest Cost (4,642) (5,295) (6,024) (6,329)
Core Construction P/E 7.8 6.5 7.8 7.1 Dividend (incl. tax) (165) (165) (165) (165)
P/BV 2.5 1.9 1.6 1.4 Other financing activities - - (3,107) 418
EV/EBITDA 6.4 6.0 5.2 4.9 Financing CF 843 (1,154) (7,808) (2,921)
EV/Sales 1.2 1.1 0.9 0.9
Net chg in cash & bank bal. 476 275 (12) (441)
Other key ratios Closing cash & bank bal 1,613 1,888 1,876 1,434
D/E (x) 1.2 1.1 1.0 0.9
DSO (days) 65 56 52 55
Du Pont Analysis - RoE

NPM (%) 8.2 8.3 5.9 5.9
Asset turnover (x) 1.0 1.0 1.0 1.0
Equity multiplier(x) 3.5 3.4 3.2 3.0
RoE (%) 29.5 26.9 18.1 16.6
Source: Company, SSLe

Recommendation History s
Date Stock Price TP Rec.

BUY HOLD SELL
4-Dec-18 467 740 BUY
Stock Price Target Price
1400 8-Feb-19 335 711 BUY
1200 8-Apr-19 619 711 BUY
1000 10-May-19 485 729 BUY

5-Aug-19 391 601 BUY
800
(Rs)
6-Sep-19 385 601 BUY

600
11-Sep-19 456 601 BUY
400
200
0
May-18
Jun-18
Jan-19
May-19
Jun-19
Mar-18
Mar-19
Feb-18
Feb-19
Apr-18
Oct-18
Apr-19
Jul-18
Jul-19
Nov-18
Dec-18
Aug-18
Sep-18
Aug-19
Sep-19
Source: Bloomberg, SSLe
SBICAP Securities Limited

(CIN): U65999MH2005PLC155485 | Research Analyst Registration No INH000000602
SEBI Registration No.: Stock Broker INZ000200032 | DP: IN-DP-314-2017 | IRDA: CA0103
Corporate Office:
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KEY TO INVESTMENT RATINGS

Guide to the expected return over the next 12 months. 1=BUY (expected to give absolute returns of 15 or more percentage points);
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DISCLOSURES & DISCLAIMERS
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directly or indirectly related to the specific recommendation(s) or view(s) in this report.
The Analysts engaged in preparation of this Report or his/her relative:-
(a) do not have any financial interests in the subject company mentioned in this Report; (b) do not own 1% or more of the equity securities of the
subject company mentioned in the report as of the last day of the month preceding the publication of the research report; and (c) do not have any
material conflict of interest at the time of publication of the Report.
The Analysts engaged in preparation of this Report:-
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officer, director or employee of the subject company; and (g) are not engaged in market-making activity for the subject company.
Name Qualification Designation Sector

Santosh Hiredesai B.E, PGDM Lead Analyst Infrastructure, Power, Aviation
Mayank Goel CA, B.Com (H) Associate Infrastructure

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Dilip Buildcon's Track Record and Outlook

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Dilip Buildcon's Track Record and Outlook

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Dilip Buildcon

Infrastructure & Construction | DBL IN

Institutional Equity Research | India

 Moderating revenue portends well for OCF generation; contained

 Has got ~75% of proceeds from Shrem deal (pending receivables/

 Recent deal with Cube reduces equity funding pressure; key

 Maintain BUY with TP of Rs601 (10xFY21e EPS; 1xP/Bv on investment)

Numbers don’t lie

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Exhibit 1: Company snapshot

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Exhibit 4: Differentiated business model

Focusing on roads with diversification in mining.

- Robust contract Management - Equipment tracking and management for efficiency

Exhibit 5: Key numbers from annual report

Balance Sheet (Rs m n)

Loan from prom oters 104 181

Interest Rate ranges on borrow ings:-

Cash Flow (Rs m n) As growth moderated to 17.7% in

Undertook high capex (Rs5.7bn) in

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Exhibit 6: Analysis of cash generated

Despite positive OCF, capex and

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Decoding the Shrem deal

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Money received by DBL for its ow n investments 5,700 9,150

Tracing in Annual Report

Total (A + B + C) 6,024 10,999

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For 18 BOT Projects (com pleted)

For 6 HAM Projects (2 com pleted; 4 u/c)

Cash Receivable by DBL 11,800 8,770 3,030

For 6 HAM Projects (2 com pleted; 4 u/c)

Am ount to be invested by Shrem 4,220 2,720 1,500

Total 16,020 11,490 4,530

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Board of Directors, Auditors and Corporate Governance

- 40 yrs of exp in govt services & State/PSUs

- 41 yrs of exp in banking including venture funding, broking.

- has an extensive experience in sectors like strategy building,

Key Managem ent Personnel

Chief Financial MBA, CA Inter, CWA

Total 36,98,15,842 (~5% of FY19 PAT)

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Dilip Suryavanshi Chairman & MD Member - Member Member - 100%

Non-Mandatory Com m ittees

Exhibit 12: Expertise and areas of operation of BOD

Exhibit 13: Changes in Board of Directors in FY19

santosh.hiredesai@sbicapsec.com | mayank.goel@sbicapsec.com September 12, 2019 | 9

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Source: Company, SSL

Exhibit 15: Details of various auditing firms

Exhibit 16: Expenditure on Corporate Social Responsibility

Exhibit 17: Change in credit ratings