Maintain BUY on Ashoka Buildcon - Q4FY21 Monetisation awaited - HDFC Securities

Mr. Parikshit D Kandpal, CFA, HDFC Securities and Mr. Chintan Parikh, Institutional Research Analyst, HDFC Securities

Ashoka Buildcon (ASBL) reported 4QFY21 revenue/EBITDA/APAT at INR 14/2/1.5bn, beating our estimates by 14/32/43% on execution and margin outperformance. Labour efficiency has recovered to 90-95% after hitting a trough at 70% in April-21. The company expects commodity price impact to be minimal, given the escalation clauses in much of the order book. The company has guided for 20-25% topline growth, 12-12.5% margin and INR 60-70bn order inflow for FY22. We maintain BUY on the stock, given low leverage (net D/E of ~0.1x) and comfortable liquidity position. Potential monetisation of HAM/BOT assets and diversification of the order book could be positive triggers for the stock. We tweak our FY22/FY23 estimate to account for impact from higher commodity prices and recovery in toll collections. We roll forward our SOTP- based target price to FY23 and increase it to INR 175/sh (vs INR 168/sh earlier).

Beat on execution and margin outperformance: ASBL reported standalone revenues at INR 13.9bn (+20/+41% YoY/QoQ), 14% ahead of our estimates. EBITDA came in at INR 2bn (+56/+91% YoY/QoQ, 32% beat). Projects coming to closure and reversal of ECL provisions led EBITDA margin to 14.5% (+334/+375 bps YoY/QoQ, vs est of 12.6%). APAT came in at INR 1.5bn (+67/+74% YoY/QoQ), 43% beat on estimate on execution and margin outperformance. 4QFY21 toll revenue grew by 18% YoY to INR 2.6bn.

Order book at INR 81.7bn; INR 60-70bn inflow guidance for FY22: OB stood at INR 81.7bn at the end of FY21. With INR 20bn YTD order inflow, current OB is at INR 101bn. ASBL is looking for additional INR 40-50bn orders in FY22. While current NHAI bid pipeline is robust at INR 700bn, the company is exploring international opportunities as well. Financial closure of two HAM projects and new order wins will be critical for the company to achieve its revenue growth of 20-25% for FY22.

Shares of ASHOKA BUILDCON LTD. was last trading in BSE at Rs.101.9 as compared to the previous close of Rs. 97.55. The total number of shares traded during the day was 427473 in over 4192 trades.

The stock hit an intraday high of Rs. 103.95 and intraday low of 98.1. The net turnover during the day was Rs. 43579301.

Source : Equity Bulls

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