Hindustan Dorr Oliver Ltd (HDO), a subsidiary of IVRCL Infrastructures and Projects Ltd, is an EPC company having its core business activities in providing engineered solutions, technologies and EPC installations in liquid-solid separation (filtration) applications.
It also manufactures fabricated equipment for petrochemical refineries and process industries such as pressure vessels, heat exchangers (shell and tube and air-cooled type), columns, storage tanks, rotary dryers, gas scrubbers, granulators and LPG bullets.
HDO’s target is to reach Rs5 billion in revenues in FY09 from Rs3 billion in FY08. Given the revenue visibility and order pipeline, we believe the target is achievable. Long-term target is to clock revenues of Rs10 billion by FY12.
At the current price, the stock is trading at 11.3x and 8.7x FY08 and FY09 earnings estimates, respectively.
On an EV/EBITDA basis, the stock is trading at 8.2x one-year forward. The balance sheet remains strong with low levels of leverage. We recommend BUY with a price target of Rs162. At the exit price, the stock will trade at 14.2x FY10 earnings.