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Healthy order inflows

Our view

Ashoka Buildcon Ltd (ASBL) 4Q performance was healthy with revenues and margins coming above our estimates.  On the back of recovery in economic activity and healthy pick up in toll revenues, the company expects sharp rebound and has retained their earlier guidance of revenue 20‐25% YoY in FY23 with EBITDAM in the range of 11‐ 12%. With the help of monetization of 6 road assets and further planned disinvestment of existing road portfolio, we expect balance sheet to strengthen further.

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 (Rs137.3bn as at 4QFY22) and foray into new verticals‐ Railways (9% of order book), Power T&D and EPC buildings. We expect ASBL to post a revenue / EBITDA CAGR of 10%/14% over FY22‐24E. Atthe CMP,the stock trades at an EV of 2.8x/ 2.7x FY23E/ FY24E EBITDA. We maintain ‘BUY’ rating on the stock with a SoTP based TP of Rs149 (Same as earlier).  

Result Highlights

* For Q4FY22, ASBL’s revenues grew 12.8% YoY at Rs19.6bn (beating our estimates of Rs16.0bn) with healthy growth of 37% in BOT revenue while construction segment saw de‐growth of 12%

* EBITDA grew 11.1% YoY to Rs5.3bn (above YSec estimate of Rs4.7bn), with EBITDAM softening 42bps to 27.2% (below YSec estimate of 29.6%). The margins contracted on account of steep rise in raw material prices.

* On the bottom‐line front, Adj. PAT came in at Rs2.2bn (above YSec estimate of Rs1.1bn) on the back of better execution.  

* During 4Q, ASBL bagged orders worth Rs37.6bn and received PCOD for its Vadodara Kim Expressway and Belgaum ‐ Khanapur HAM projects.

* At the CMP, the stock trades at an EV of 4.7x and 4.4x FY23E and FY24E EBITDA.

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