Ashoka Buildcon Ltd. share price target

BOT collections (for existing portfolio) grew 8% YoY to Rs 2.6 bn, primarily driven by traffic growth.Excluding projects which are due to get over soon, toll collection was up 10% YoY. EPC execution maintains its trend of steady growth (up 13% in Q4 and ~15% in H2).

ASBL 4QFY17 adjusted PAT came in 31% below our estimates on account of EBIDTA margins contraction and higher interest expense. EBITDA margins contracted ~200bps YoY to 10.4% (140bps lower than our estimates) led by increase in material expenses (239bps YoY), higher employee costs (44bps YoY).

PAT grew 15.2% YoY to | 65.3 crore mainly on account of lower interest expenses (| 18.1 crore in Q4FY17 vs. | 29.6 crore in Q4FY16) and lower effective tax rate (11.7% in Q4FY17 vs. 33.4% in Q4FY16) Highest ever order backlog of ~| 7005 crore The company witnessed highest ever order inflows (OI) of ~| 3926 crore in FY17 taking its orderbook to ~| 7005 crore, 3.3x its construction revenues (on a TTM basis). The OI does not include the recently won power project in Jharkhand in May, 2017 worth ~| 282.7 crore. Even in...

Ashoka Buildcon (ABL) signed a deal with Mumbai International Airport Ltd (MIAL) to developland parcels around the airport. While this is a diversification into unfamiliar terrain, prima facie analysis suggests the deal is close to prevailing rates in the region (transaction NPV of Rs 5.8 bn or Rs 5

ASBL 3QFY17 Revenue, EBIDTA and PAT estimates were 5.5/6.8/35.4% ahead of our estimates on account of execution pickup and savings in depreciation, interest and tax. EBITDA margins expanded ~59bps YoY to 12% (20bps ahead of our estimates) led by increase in other op income to Rs 35mn YoY (largely scrap sales).

ICICI Securities Ltd | Retail Equity Research Ashoka Buildcon (ABL) reported its Q3FY17 results on a standalone basis. Hence, they were not comparable with our estimates Revenues grew 18.2% YoY to | 524.0 crore due to strong execution EBITDA margins expanded 50 bps YoY to 11.8% mainly on account...

ABL 2QFY17 standalone financial performance was above expectations as EBITDA ( 7.0% YoY) came 25.4% ahead of our estimates, mainly on account of Rs 160mn saving achieved on six month early completion of Bihar T&D project. EBITDA margins expanded ~187bps YoY to 15.8% (~337bps ahead of our estimates) led by ~382bps YoY contraction raw material costs (Bihar project).

Standalone EBITDA grew 7% YoY (Rs 698 mn) due to 180 bps YoY margin expansion to 15.8% (savings in overheads [Rs 150 mn] in T&D; project in Bihar due to early completion).We consider ~12% as maintainable margin (in line with the management).

Ashoka Buildcon (ABL) reported Q1FY17 results on a standalone basis due to Ind-AS. Hence, it was not comparable with our estimates • ABL’s revenues de-grew 1.4% YoY to | 468.4 crore .The EBITDA margin contracted 160 bps YoY to 12.7% .The bottomline de-grew 32.7% YoY to | 30.8 crore mainly on account of a higher effective tax rate (35.5% in Q1FY17 vs. 27.0% in Q1FY16) and EBITDA margin contraction.

Valuation: ICICI Securities Limited maintain their HOLD recommendation on the stock with a revised SOTP based price target of | 160/share as they have now incorporated reduction in standalone debt which led to increase in our target price by ~|10/share.

Ashoka Buildcon Ltd. (ABL), 1QFY17 financial performance was impacted by delays in execution pickup in recent order wins, resulting in lower EPC revenue (-3.4% YoY). EBITDA margins declined ~150bps YoY to 12.8% led by ~293bps YoY contraction in EPC margins to ~10.9%.ABL’s YTDFY17 order inflow stood at Rs 20.9bn i.e. ~59% of our FY17E order inflow estimate. Recent project wins are an indication of ABL’s conservative stance, with its bids being not only ~1-6% above NHAI’s benchmark costs but also within 2-9% range of L2 bidder. Consequently, we expect ABL’s FY17E EPC EBITDA margins recovery to ~12.1% primarily on account of the new order crossing margin recognition threshold. ABL didn’t recognize margin on Rs 400mn of revenue during 1QFY17 as margin threshold was not met. Maintain BUY with SOTP-based TP of Rs 202/share.

Valuation: They maintain BUY on ABL with TP of Rs 202/share. We value the (1) Standalone EPC business at Rs 111/share (15x one-year forward FY18 EPS) and (2) ABL BOT projects at Rs 76/share (3) land at historical costs at Rs 15/share.