IGI Logo

Strong execution

Our view

Ashoka Buildcon Ltd (ASBL) reported a mixed set of numbers, with a strong revenue growth of 43% YoY to Rs18.1bn led by robust execution while EBiTDA margins remained under pressure. The margin is expected to remain in the range of 9 ? 10% in FY23E, impacted by the project mix. The five ACL BOT sales worth Rs13.4bn are expected to conclude by Q3 and the Jaora BOT asset sale is expected to monetize in FY23 end. The Chennai ORR sale deal with NIIF is expected to fetch Rs4.5bn and is targeted to be completed by Q3FY22 and the consideration of the same is expected to be received in Q4 which will be utilized to reduce the debt level thereby strengthening the balance sheet. ASBL has bagged orders worth Rs48.6bn in 1H and plans to bag additional orders worth Rs50bn in 2HFY23E. With strong order book position of Rs149bn and healthy execution, management has upgraded its revenue guidance to 25?30% growth.

We remain positive on the company given a) its excellent blend of diversified EPC orders and asset b) stable EPC margins and c) healthy order book (Rs149bn as at 2QFY23) and foray into new verticals? Railways (10% of order book), Power T&D and EPC buildings. We have trimmed our EBITDA and PAT estimates for FY24E by 9%/10% as the new orders bagged by the company are on competitive pricing having marginally low margins. We have also introduced FY25 estimates with revenue and PAT growth of 11%/13% YoY. At the CMP, the stock trades at an EV of 2.8x FY23E EBITDA. We maintain ‘BUY’ rating on the stock with a SoTP based TP of Rs141.

Result Highlights

* For Q2FY23, ASBL’s revenues grew 42.9% YoY at Rs18.1bn (beating our estimates of Rs11.5bn) with healthy growth of 49% in BOT revenue and construction segment saw growth of 36%

* EBITDA grew 5.3% YoY to Rs4.3bn (above our estimate of Rs3.2bn), with EBITDAM softening 848bps to 23.8% (below our estimate of 28.2%). The margins contracted on account of steep rise in raw material prices.

* On the bottom?line front, Adj. PAT came in at Rs657mn (above YSec estimate of Rs581mn) on the back of better execution

* During 2Q, ASBL bagged orders worth Rs11.1bn.

* At the CMP, the stock trades at an EV of 2.8x FY23E EBITDA.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632

Above views are of the author and not of the website kindly read disclaimer