Ashoka Buildcon Ltd. share price target

Over last 3M, ABL has underperformed CNXINFRA by 18%. The concerns surrounding SBIM stake sale and likely event of ABL giving cash exit (in case of distress valuation) may have led to this underperformance. ABL as per exit term has no mandatory cash settlement clause. At best there could be asset transfer which may be stake dilutive for ABL and result in investment write down. Going by consensus ACL valuation impact could be Rs 7.3bn (Rs 26/sh). We maintain BUY. Key risks (1) Delay in SBI Macquarie deal closure; (2) Dip in traffic revenue from BOT projects; (3) Delay in ADs. We maintain BUY on ABL with reduced SOTP of Rs 220/sh. We have cut our standalone EPC multiple from 15x to 12x to factor in concerns surrounding ACL monetization and likely impact on ABL stake dilution in ACL below 61%, in case of suboptimal valuation bids.

Currently looking to bid for | 50,000 crore road projects ABL's orderbook (OB) stood at | 8,168.3 crore in Q1FY20, implying OB-tobill ratio of 2.0x TTM revenues, giving comfort on execution ahead. This OB consists of | 4,169.6 crore BOT, | 2,066.1 crore EPC, | 828 crore power T&D;, | 1,095.0 crore railway & | 9.6 crore CGD projects. The company is currently intending to bid for road projects worth ~| 50,000 crore and targets Order Inflow (OI) to the tune of | 4,000-6,000 crore in FY20E. On the execution front, with appointed date (AD) for Belgaum-Khanapur HAM project received on March 7, 2019, execution on the project has started. With this, three of...

Ashoka Buildcon's (ASBL) Q1FY20 revenue grew 28% YoY to Rs 8.8bn, below our estimate of Rs 11.8bn due to delayed execution of power T&D;/ railways projects.

Strong performance in a challenging environment: Revenue grew 30% YoY in 1QFY20, which is commendable in a challenging operating environment (liquidity crunch and slowdown amid the election period of around two months). We note that ASBL's revenue growth was strongest among our coverage universe companies. The key positive surprise was the sequential decline in interest expense to INR214m, attributable to a fall in gross debt by INR1.4b. Overall, net profit grew 23% YoY to INR647m (in-line). Dependency on new ordering might increase at such high execution rate:...

Ashoka Buildcon Ltd (ASBL) has reported extremely good set of result for 4QFY19 with revenue of Rs13bn, +86% YoY, vs. our expectations of Rs9.1bn. The beat was driven by better execution among most under construction HAM projects, TOT EPC project (along with another EPC project in Maharashtra) and power projects in Bihar and Uttar Pradesh. The management has guided for 25-30% growth in FY20 which has upside potential depending on the order inflow in this year. We are building in 21% revenue and 14% EBITDA CAGR over FY19-21 in our estimates. Given the clarification by the management that there is a two year extension in closing the deal with PE investor, we believe that near term stock...

ABL's orderbook (OB) was at a strong | 9,658 crore as of Q4FY19, implying orderbook-to-bill ratio of 2x, giving comfort on execution ahead. This OB includes orders worth | 1,264 crore against which the company has received LoI for RVNL Punjab and HAM for Tumkur IV package. Balance OB worth | 8,394 crore consists of | 6,744 crore order for roads (| 4,620 crore BOT and | 2,124 crore EPC), | 913.9 crore for Power T&D;, | 720 crore for railways and | 16.1 for CGD projects. The management has targeted OI to the tune of ~| 6,000 crore in FY20E (~| 4,000 crore from roads, | 1,600-2,000 crore...

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...

ABL is well placed to capitalize on the upcoming infra opportunities with a strong balance sheet (0.3x FY19 net D/E). Speedy BOT asset monetization (incl. Macquarie's exit) would allow ABL the flexibility to bid for more HAM/ BOT projects, without increasing leverage (~ABL has guided for peak standalone debt of Rs 7-8bn, current debt is Rs 7.2bn). We maintain BUY. Key risks (1) Delay in SBI Macquarie deal closure; (2) Slow traffic recovery; (3) High interest rate; and (4) Delay in ADs. We maintain BUY on ABL with a SOTP of Rs 261/sh. We value the EPC business at 15x FY21E EPS (similar to Sadbhav Eng. and vs. 18x to KNR and PNC).

Ashoka Buildcon's (ASBL) Q4FY19 revenue and EBITDA scaled new highs as execution on HAM projects gained momentum. EBITDA margins were also healthy at 13.9%. High growth was supported by more debt (Rs 7.9bn as on Mar'19), but with improved recoveries in April, debt reduced to Rs 5.1bn. The order backlog as on Mar'19 stood at Rs 96.6bn (2.7x FY19 revenue, incl. L1 of Rs 12.6bn). Muted traffic led to a 2.6% YoY dip in gross toll collections to...

ASBL reported Q4FY19 sales of Rs13.1bn, above our and Street estimates, on betterthan-expected execution in key projects in both Power T&D; and Roads. EBITDA soared 124.8% yoy to Rs1.8bn on strong execution and better operating performance. During FY19, ASBL won orders worth Rs64bn and is L1 in orders worth Rs12.6bn from RVNL Punjab and Tumkur-Shivamogga Section package-IV HAM projects. ASBL's order...