Ashoka Buildcon - 2QFY2013 Result Update - Angel Broking

For 2QFY2013, Ashoka Buildcon (ABL) reported a mixed set of numbers with revenue reporting a muted growth while EBITDAM came in ahead of our estimate resulting in higher earnings growth. Order book as of 2QFY2013 stood at Rs.4,417cr (2.8x FY2013E E&C revenue), providing revenue visibility. We maintain our Buy rating on the stock.

Mixed set of numbers: On the top-line front, ABL reported a muted growth of 6.5% yoy to Rs.305cr (Rs.287cr) which was below our estimate of Rs.403cr. The E&C segment contributed revenue of Rs.240cr (including other income) and the BOT segment reported Rs.70cr (including other income) for the quarter. On the EBITDAM front, ABL's margins came in at 26.0% (23.3%) higher than our estimate of 22.0%. Interest cost came in at Rs.34cr a jump of 40% yoy but a decline of 9.4% on sequential basis. On the bottom-line front, ABL reported a decent growth of 42% yoy to Rs.24.0cr (Rs.17.0cr) above our estimate of Rs.22.0cr, owing to better-than-expected performance at the operating level.

Outlook and valuation: ABL successfully diluted 34% stake in Ashoka Concessions Ltd (ACL) for Rs.700cr to SBI-Macquarie, valuing ACL at Rs.2,060cr. Further, SBIMacquarie will invest a further Rs.650cr for future bids as well. This development is positive for ABL as not only does it take care of equity requirement for the current portfolio but it also provides comfort for future bids. Management expects to get environment clearance by March end, post which it would commence construction activity for the Cuttack Angul project. We have valued ABL on a SOTP basis- by assigning 4.0x EV/EBITDA to its standalone business (Rs.113/share) and valued its BOT projects on NPV basis (Rs.174/share) to arrive at a target price of Rs.286, which implies an upside of 31.8% from current levels.

Source : Equity Bulls

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