MOSL: ASHOKA BUILDCON (Buy)-Beat on all fronts supported by robust execution of in hand projects
Ashoka buildcon: Beat on all fronts supported by robust execution of in hand projects
(ASBL IN, Mkt Cap USD0.5b, CMP INR124, TP INR175, 41% Upside, Buy)
- Better-than-expected execution drives operational beat: ASBL’s standalone revenue grew 62% YoY to INR10.7b in 3QFY19, beating our estimate of INR8.6b. Sales were supported by better-than-estimated execution of projects in hand. Construction revenue grow 66% YoY supported by strong growth in the power T&D segment (+94% YoY to INR2.5b). EBIDTA grew 99% YoY to INR1.5b, ahead of our estimate of INR1.0b, with margin improvement of 265bp to 14.0% from 11.3% in the year-ago period. Reported profit stood at INR622m (+32% YoY) below our estimate of INR700m. During the quarter, ASBL provided for INR398m towards its exposure to GVR Infra (total exposure at INR806m); adjusting for this PAT stood at INR895m (+91% YoY).
- Order backlog provides robust revenue visibility: ASBL’s order backlog as at Dec’18 stood at a healthy INR95b (including HAM EPC of INR42b). This provides revenue visibility of 3.7x its FY18 EPC revenue. Also, ASBL is the lowest bidder (L1) for two packages of JBVNL Rural Electrification projects worth INR2.1b with an execution timeframe of 18 months.
- BoT portfolio exhibits muted growth of 3% YoY: ASBL’s subsidiary Ashoka Concession’s (ACL) BoT portfolio registered growth of 3.2% YoY in 3QFY19. Traffic growth was impacted across projects on account of weak economic activity and relaxation in axle load. ABL’s BoT portfolio registered decline of 53.44% YoY due to expiry of the Hebbalu and Hattangiri Toll Collection project. Growth from ABL’s continuing project portfolio also declined 1.2% YoY.
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.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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