Q3FY19 result highlights
Key positives: Strong execution and robust order backlog position.
Key negatives: IT tax demand notice and provision for GVR exposure.
Impact on financials: 9.5% earnings upgrade in FY19. 6.9% downgrade in FY20 earnings due to delay in appointed dates for new HAM projects.
Valuations & view
We expect revenue growth to remain strong given the contribution from newer projects driving 37% revenue CAGR over FY18-20E. ABL offers an attractive combination of strong earnings growth (26% pre-tax CAGR over FY18-20E), low leverage & attractive valuations. ABL trades at 11.4x/10.6x FY19E/FY20E standalone earnings without adjusting for value of its assets. We value EPC business at Rs38bn (14x FY20 EPS) & our overall revised SOTP based PT for ABL is Rs219. Maintain Outperformer.
Ashoka Buildcon Ltd.. Ashoka Buildcon Limited is an India-based infrastructure development company. The Company is engaged in construction and maintenance of roads, and supporting services to land support-operation of toll roads and others. The Company operates through three segments: Construction and Contract related activities; BOT Projects, and Sales of Goods. Its Construction and Contract related activities segment consists of execution of engineering and construction projects to provide solutions in civil and electrical engineering (on turnkey basis or otherwise) to core/infrastructure sectors. The Company's BOT Activity relates to execution of projects on long-term basis comprising developing, operating and maintaining the infrastructure facility. The Sales of Goods segment includes the activity of selling of ready mix concrete (RMC), plain cement concrete (PCC) poles, software and bitumen. The Company has projects under construction in the States of Tamil Nadu, Karnataka, Odisha and West Bengal.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
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