MOSL: ASHOKA BUILDCON (Buy)-Beat on all fronts supported by robust execution of projects
Ashoka Buildcon: Beat on all fronts supported by robust execution of projects
(ASBL IN, Mkt Cap USD0.5b, CMP INR128, TP INR175, 36% Upside, Buy)
- Better-than-expected execution drives operational beat: 4QFY19 standalone revenues grew 86% YoY to INR13.1b (our est. INR9.6b); sales were supported by better-than-estimated execution of projects in hand. EBIDTA grew 125% YoY to INR1.8b (our est. INR1.2b), with margins improving 240bp to 13.9% from 11.5% in the year-ago period. Reported profit declined 7% YoY to INR980m (our est. INR800m). During the quarter, ASBL provided for INR73m towards its exposure to GVR Infra (total exposure at INR806m); adjusting for this, PAT stood at INR1.0b (-2.5% YoY). Despite strong revenue growth (+86% YoY), Adj. Pat declined 2.5% YoY due to lower other income (INR380m v/s INR612m in 4QFY18) and higher tax rate (34.5% v/s 9.3% in 4QFY18).
- Financial closure achieved for all HAM projects; appointed date awaited for three HAM projects: ASBL has achieved financial closure for seven HAM projects and has appointed date in place for four projects. Appointed date for the balance three projects (Tumkur package I, II and Khanapur project) is expected by Jun'19. We expect strong execution pick-up from 2HFY20 and build in 30% revenue growth for FY20.
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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