MOSL: ASHOKA BUILDCON (Buy)-Other income leads earnings surprise, order inflow healthy
ASHOKA BUILDCON: Other income leads earnings surprise, order inflow healthy
(ASBL IN, Mkt Cap USD0.4b, CMP INR104, TP INR150, 44% Upside, Buy)
Slight miss in operating performance; order book accretion welcome
- After many quarters of outperformance, Ashoka Buildcon's (ASBL) 3QFY20 operating performance was weak with revenue declining 8% YoY. While EBITDA was 6% below est., high other income led to earnings surprise by 8%.
- Including L1 orders, order book stands at INR95.5b with OB/Rev ratio improving to 2.5x. Strong order inflows came at the right time as strong execution over the past 6 quarters was leading to faster depletion of the order book, thereby raising concerns on sustainability of revenue run-rate.
- Toll collection growth in the Ashoka Concessions portfolio remains muted, thus, indicating decline in traffic growth. We maintain our standalone earnings estimate, but lower our valuation of road assets. Maintain TP of INR150 as we roll over to Sep'21E EPS. Maintain Buy.
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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