IDFC Securities - Ashoka Buildcon (ASHOKA) Ashoka Buildcons Q3FY18 results (Outperformer) - Strong execution

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IDFC Securities

Ashoka Buildcon's Q3FY18 results (Outperformer) - Strong execution

Q3FY18 result highlights

Ashoka Buildcon (ABL) posted strong Q3FY18 earnings of Rs520m (est: Rs417m) up 21.8%yoy, led by higher revenue and higher other income.
Standalone revenue grew 25.7%yoy to Rs6.6bn (est: Rs6.2bn) led by strong execution from the Eastern Peripheral Expressway (Rs1.3bn). The company expects ramp-up in execution from Ranastalam-Anandpuram HAM and Jharkhand-Chaas EPC projects in Q4FY18.
EBITDA grew 28.3%yoy to Rs796m (est: Rs758m) and EBITDA margin grew 25bp yoy to 12.1% as against estimate of 12.2%. During the quarter ABL recognised revenue from Ranastalam project that did not reach margin booking threshold. ABL maintained its EBITDA margin guidance of 12.5-13% for FY18.
Traffic growth (yoy) remained strong, especially in the Eastern India projects: Dhankuni; 18.5%, Sambalpur; 23.8%, Bhandara; 8% and Durg; 4.3%. Other projects too reported strong traffic growth: Belgaum; 18.6% and Jaora; 7.6%.
Standalone debt grew Rs1.2bn qoq to Rs2.6bn (Rs1.4bn as on Sep-17). The rise in debt was led by increase in WC loan by Rs1bn qoq to Rs1.7bn. However, the company has received a delayed payment of Rs2.1bn on Jan 2, 2018 leading to moderation of WC levels. Consolidated gross debt went up by Rs3.1bn qoq to Rs48bn.
Order inflow so far in FY18 remained weak at Rs4.5bn and order backlog declined 4.5%yoy to Rs59.4bn (2.7x TTM construction revenue). For Q4FY18/Q1FY19, ABL has guided for order inflow of Rs40-50bn from roads segment. The company plans to bid for NHAI & MORTH projects worth ~Rs600bn (~4,000km) over the next two months.

Key positives: Pick up in execution from newer projects.

Key negatives: Weak order inflow.

Impact on financials (Standalone): No change in standalone earnings.

Valuations & view

Revenue contribution from newer projects is picking up pace and we expect a solid recovery from Q4FY18 onwards driving 19.3% revenue CAGR over FY18E-20E. A strong execution track record and well-capitalized balance sheet (consolidated net D/E of 2.2x in FY17) are ABL’s key strengths. ABL offers an attractive combination of strong earnings growth (19.1% pre-tax CAGR over FY18E-20E), low leverage and attractive valuations. ABL trades at 11.0x/9.4x FY19E/FY20E standalone earnings adjusted for Rs122/sh value of its assets. We maintain our Outperformer rating with a SoTP based target price of Rs312.

02/02/2018 7 EN

Underlying

Ashoka Buildcon

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.

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INE442H01029 National Stock Exchange of India India

Provider

IDFC Securities

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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Ashoka Buildcon's Q3FY18 results (Outperformer) - Strong execution

With a more favourable environment, ASHOKA BUILDCON improves to Slightly Positive

Monthly LMI Update Independent Investment Research

Ashoka Buildcon's Q3FY20 results (Outperformer) - Slow execution impacts profitability

GMR Infrastructure's Q3FY20 results (Outperformer) - Air traffic growth improved at the airports; deleveraging process gains momentum

Ambuja Cement's Q4CY19 results (Outperformer) - In line; cost efficiencies at play

Event update: Aurobindo Pharma (Outperformer) - Unit IV receives EIR; positive outcome

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