Motilal Oswal's research report on Ashoka Buildcon
Better-than-expected execution drives operational beat: 4QFY19 standalone revenues grew 86% YoY to INR13.1b (our est. INR9.6b); sales were supported by better-than-estimated execution of projects in hand. EBIDTA grew 125% YoY to INR1.8b (our est. INR1.2b), with margins improving 240bp to 13.9% from 11.5% in the year-ago period. Reported 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 other income (INR380m v/s INR612m in 4QFY18) and higher tax rate (34.5% v/s 9.3% in 4QFY18).
OutlookWe cut our earnings estimate by 7%/9% for FY20/21 to factor in (a) delay in execution pick-up of three HAM projects where appointed date is yet to be received, and (b) the higher interest cost given the rise in debt (taken for the WC and equipment loan purpose). We maintain our Buy rating with SOTP-based TP of INR175.
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