Ahluwalia Contracts shares jump 18% on ₹572 crore order win; up 624% in 4 years

Shares of Ahluwalia Contracts (India) surged 18% in today's intraday trading session, reaching a new all-time high of ₹1,542 apiece after the company secured a substantial construction order.

The company announced through an exchange filing on Thursday that it had been awarded a ₹572 crore contract from the Airports Authority of India for the construction of a new terminal building, allied structures, and external development works under the Engineering Procurement and Construction (EPC) model.

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Investor optimism surged following the order win, prompting the stock to open significantly higher at ₹1,337 apiece compared to the previous day's closing price of ₹1,306.

This marks the company's second major order win in just over a month. Earlier, on June 10, it secured an order worth ₹98.80 crore from Indian Financial Technology and Allied Services for MEP work at the Enterprise Computing and Cybersecurity Training Institute in Bhubaneshwar. Before that, in early June, the company received an order worth ₹88.15 crore from Daffodil Hotel Private Limited for civil work at Park Hyatt Goa.

Buoyed by these order wins, the company's shares have surged by 91% year-to-date, marking a remarkable 624% gain over the past four years. Impressively, this year's performance has already surpassed 2023's return of 63% within the first six months.

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The company is an integrated construction company with over five decades of expertise in infrastructure development. In FY24, its gross order book increased to ₹111,799 million from ₹81,627 million in FY23, which is 37% YoY growth.

The distribution of its order book includes 38% from central government projects, 23.5% from state governments, 34.9% from the private sector, and 3.4% from overseas government projects, according to the company Q4FY24 investor presentation.

The construction sector in India is poised for substantial growth, projected to reach $1.4 trillion by 2025, with an estimated investment requirement of US$966 million by 2040. There is increasing demand for commercial spaces such as office spaces, hotels, retail, and entertainment units, evidenced by the absorption of 31.9 million square feet of office space across India's six largest cities in 2020.

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Urbanisation trends indicate that by 2030, over 40% of India's population is expected to reside in urban areas, up from 33% currently, driving demand for 25 million additional mid-end and affordable housing units.

Under the National Infrastructure Pipeline (NIP), India has earmarked a $1.4 trillion investment budget, with allocations of 24% for renewable energy, 18% for roads and highways, 17% for urban infrastructure, and 12% for railways.

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