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Execution recovery & deleveraging is key catalysts

ASBL reported a subdued Q4FY26/FY26 performance, with standalone revenue declining 10% YoY / 18% YoY, reflecting slower execution. Management, however, has guided for a recovery in FY27 with ~20% revenue growth and EBITDA margins improving to ~9.5–10.5% as execution normalizes. Margin delivery remains a key monitorable given the prevailing cost inflation environment. FY26 order inflow stood at INR 66bn, while the order book remains diversified at ~INR 153bn (~2.6x TTM revenue), with ~66% exposure to roads/railways and ~20% to power T&D, providing medium-term revenue visibility. The ongoing HAM asset monetisation is expected to strengthen the balance sheet, with management guiding for INR 11–12bn proceeds that could materially reduce standalone debt of ~INR 11bn. Following the weak Q4 results, we cut FY27E/FY28E EPS estimates by 11%/5% and lower TP to INR 152. We retain BUY, as the stock continues to trade below book value, offering valuation support despite near-term execution challenges

Weak execution in Q4FY26:

Ashoka Buildcon reported weak standalone performance with revenue reported at INR 17.7 bn down 10% YoY, was 10% below our and consensus estimates, revenue was impacted due to slower execution and delay in clearances and land availability, EBITDA came in at INR 1.2 bn down 15% YoY and 25% below our and consensus estimates, impacted due to higher input costs and ECL provision od INR 280 mn during the quarter. EBITDA margin stood at 6.9% vs 7.3% YoY, margin impacted from ECL provision (adusting the same could result in EBITDA margin of 8%+). Weak reported EBITDA resulted in PAT decline of 18% YoY at INR 488 mn was below our and consensus estimates by 30%

Guidance going ahead:

Management has guided a 20% revenue growth in FY27, marking a recovery after a transition-led slowdown in FY26 (here revenue was -18% YoY), with execution expected to normalize across projects. EBITDA margins are guided at 9.5– 10.5%, with an aspiration to achieve double-digit levels, factoring in ECL provisions. The company targets order inflows of INR 80–100 Bn, supported by a strong bid pipeline of INR 400 Bn across diversified segments including roads, T&D, railways, water, and buildings, working capital is expected to normalize to 110–120 days by H1FY27 end, while capex remains modest (INR 1 Bn). Overall, the company is positioned for execution-led growth with improving balance sheet strength and diversified order inflows.

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