HDFC Securities' research report on Ashoka Buildcon
ASBL delivered weak 1QFY19 performance with revenue 3.9% lower than our estimates. Construction revenue came in at Rs 6.3bn, sale of goods at Rs 0.4bn and BOT at Rs 0.1bn. Exceptional settlement Rs 0.1bn in Chittorgarh Bypass has been adjusted from revenue. Blended EBITDA margins were lower at 10.4% (-267bps YoY, -107bps QoQ) on account of a larger share of power segment (Rs 1.3bn in 1QFY19) in which ASBL generates lower margins. Toll Hikes were effected from Apr-18 across major projects where as Bhandara and Durg hikes would apply from Sep-18. YoY toll grew 7.2%, 13.6%, 6.8%, 2.5%, 9.1% and 23.8% YoY in Belgaum, Dhankuni, Bhandara, Durg, JN and Sambalpur respectively.
OutlookThe upcoming bid season is strong with ASBL participating in bids worth ~Rs 250bn, and targeting Rs 50-70bn of HAM projects in FY19E in addition to Rs 10-15bn in Power T&D. We maintain BUY on ASBL with a bonus adjusted TP of Rs 225/share.
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