Ashoka Buildcon Absolute :...
Transcript of Ashoka Buildcon Absolute :...
November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 1 of 15
Before reading this report, you must refer to the disclaimer on the last page.
Ashoka Buildcon Absolute : LONG
Relative : Overweight
2QFY18 Result: Estimate (), Target (), Rating () Regular Coverage 38% ATR in 17 Months
NH-6 traffic growth in double digits; execution to scale up post one-off impact in 2Q18E Construction
2017 Equirus All rights reserved
Rating Information
Price (Rs) 207
Target Price (Rs) 320
Target Date 31st Mar'19
Target Set On 13th Nov'17
Implied yrs of growth (DCF) 15
Fair Value (DCF) 326
Fair Value (DDM) 132
Ind Benchmark BSEMDCAP
Model Portfolio Position NA
Stock Information
Market Cap (Rs Mn) 38,805
Free Float (%) 43.35 %
52 Wk H/L (Rs) 243.5/136.5
Avg Daily Volume (1yr) 224,000
Avg Daily Value (Rs Mn) 42
Equity Cap (Rs Mn) 936
Face Value (Rs) 5
Bloomberg Code ASBL IN
Ownership Recent 3M 12M
Promoters 56.6 % 0.0 % 0.0 %
DII 27.0 % 2.2 % 3.9 %
FII 5.9 % -2.0 % -2.6 %
Public 10.5 % -0.2 % -1.3 %
Price % 1M 3M 12M
Absolute 9.8 % 17.5 % 30.0 %
Vs Industry 6.3 % 5.3 % -2.6 %
Sadbhav Eng 13.1 % 17.6 % 14.6 %
ITNL 19.8 % 28.2 % 55.1 %
Standalone Quarterly EPS forecast
Rs/Share 1Q 2Q 3Q 4Q
EPS (17A) 1.6 2.4 2.3 3.4
EPS (18E) 3.3 1.7 2.8 3.3
Ashoka Buildcon’s (ASBL) execution during 2QFY18 was hampered by one-offs
related to (1) local agitation in the Eastern Peripheral Project and, (2) lower T&D
revenues due to GST transition. With an order book of Rs 61bn and order book/TTM
revenues at 2.95x, we are confident on 20% revenue CAGR over FY17-FY20E. Toll
collections grew 17% yoy with most projects seeing decent traffic growth. We
expect new HAM project wins, sale of SBI Macquarie stake and steady EPC
performance to be key stock re-rating triggers. Maintain LONG with a SOTP-based
Mar’19 TP of Rs 320 (Sep'18 TP of Rs 276 earlier).
One-offs hurt execution; 2.95x OB/TTM revenue enhances visibility: Standalone
revenues declined 48% qoq/14% yoy due to local agitation at the Eastern Peripheral
Expressway and lower T&D revenues on account of GST transition. Normalcy has
been restored in these sites and with 2.95x OB/TTM revenue visibility, we remain
confident of 22%/23% revenue growth in FY18E/FY19E and 19% EBITDA CAGR over
FY17A-FY20E. We expect ASBL to generate EBITDA margins of 12.5-13% ahead with
increased contribution from higher-margin road EPC projects.
Four large ACL projects scale up with 17% yoy toll collection growth: During
2QFY18, ACL’s toll collections rose 14% yoy to Rs 1.95bn (2QFY17: Rs 1.7bn) aided by
toll rate hikes and strong traffic growth across key projects. Dhankuni/Jaora saw
16%/18% yoy revenue growth and Sambalpur/Belgaum 15%/17% yoy. Though the SBI
Macquarie stake transfer is taking some time, we expect a reasonable conclusion of
the process due to the inherent potential of NH-6 and a low traffic base.
Higher road share to improve WC position; expect order inflows to pick up in
2H: Higher contribution of roads and financial closure of HAM projects will lead to
a better margin profile and WC improvements ahead. Post the slow pace of
ordering in 1HFY18, we expect a substantial pick up in the coming 3-4 months.
Management is optimistic of incremental order inflows of Rs 30bn-40bn by FY18E.
Valuations offer significant room for re-rating: We expect a re-rating of the stock
led by (a) execution ramp-ups, (b) more EPC/hybrid annuity project wins and (c)
declining interest rates. We continue to value the stock at 15x P/E for FY18E EPC
business and FCFE-based DCF for BOT business. We have factored in (1) a 20%
holding company discount for the BOT portfolio and (2) ~Rs 5bn valuation for the
real estate portfolio. Key risks are weak execution and unrelated diversification.
Change in Standalone Estimates
% change over previous estimates
FY18E FY19E FY18E FY19E
Sales 24,963 30,739 -2.0% 0.4%
EBITDA 3,309 3,963 1.8% 4.4%
EPS 11.2 11.7 6.9% 2.5%
Standalone Financials
Rs. Mn YE Mar FY17A FY18E FY19E FY20E
Sales 20,451 24,963 30,739 36,517
EBITDA 2,597 3,309 3,963 4,616
Depreciation 507 517 577 612
Interest Expense 474 489 615 800
Other Income 719 333 148 153
Reported PAT 1,840 2,101 2,189 2,517
Recurring PAT 1,840 2,101 2,189 2,517
Total Equity 18,642 20,744 22,933 25,450
Gross Debt 1,768 3,907 4,103 4,144
Cash 638 380 -403 -1,228
Rs Per Share FY17A FY18E FY19E FY20E
Earnings 9.8 11.2 11.7 13.5
Book Value 100 111 123 136
Dividends 0.8 2.0 2.3 2.3
FCFF 17.8 -0.2 -2.8 -1.4
P/E (x) 21.1 18.5 17.7 15.4
P/B (x) 2.1 1.9 1.7 1.5
EV/EBITDA (x) 16.2 12.8 10.9 9.6
ROE (%) 10% 11% 10% 10%
Core ROIC (%) 17% 21% 20% 20%
EBITDA Margin (%) 13% 13% 13% 13%
Net Margin (%) 9% 8% 7% 7%
Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 2 of 15
Before reading this report, you must refer to the disclaimer on the last page.
Quarterly performance, standalone
Particulars (Rs Mn) 2QFY18 2QFY18E 1QFY17 2QFY17 % Change
Comments 2QFY18E 1QFY17 2QFY17
Net Sales 3,787 4,829 7,228 4,428 -22% -48% -14%
Operating Expenses 2,863 3,847 5,777 3,352 -26% -50% -15%
Employee Cost 247 226 269 207 9% -8% 19%
Other Expenditure 171 145 208 171 18% -18% 0%
Total Expenditures 3,281 4,218 6,253 3,730 -22% -48% -12%
EBITDA 506 611 975 697 -17% -48% -27%
Depreciation 130 146 113 130 -11% 15% 0%
EBIT 376 465 862 567 -19% -56% -34%
Interest 116 56 129 80 106% -11% 44%
Other Income 108 35 92 92 209% 17% 17%
PBT 368 444 824 580 -17% -55% -37%
Tax 41 111 205 125 -63% -80% -67%
Tax Rate 11% 25% 25% 22%
Recurring PAT 327 333 619 455 -2% -47% -28%
Extraordinaries 0 0 0 0
Reported PAT 327 333 619 455 -2% -47% -28%
EPS (Rs) 1.7 1.8 3.3 2.4 -2% -47% -28%
EBITDA Margin 13.4% 12.6% 13.5% 15.7% 71 bps -13 bps -239 bps
EBIT Margin 9.9% 9.6% 11.9% 12.8% 29 bps -200 bps -289 bps
PBT Margin 9.7% 9.2% 11.4% 13.1% 53 bps -169 bps -338 bps
PAT Margin 8.6% 6.9% 8.6% 10.3% 173 bps 6 bps -164 bps
Tax Rate 11.2% 25.0% 24.9% 21.6% -1378 bps -1365 bps -1034 bps
Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
______________________________________________________________________________________________________________________________________ November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 3 of 14
Key Quarterly Updates
Exhibit 1: Toll collections have risen robustly across stretches
A) Jaora-Nayagaon, Dhankuni & Sambalpur push toll collections up by 13%
ACL Projects 2QFY18 2QFY17 1QFY18 Yoy Qoq
Belgaum Dharwad 208 186 214 12% -3%
Dhankuni Kharagpur 757 659 786 15% -4%
Bhandara 150 146 156 3% -4%
Durg 185 189 190 -2% -3%
Jaora Nayagaon 503 425 474 18% 6%
Pimpalgaon Nasik - - - - -
Sambalpur 142 123 145 15% -2%
Total Toll Collection 1,945 1,728 1,965 13% -1%
Source: 2QFY18 Investor Presentation, Equirus Securities
B) Collections for ASBL projects up 13% YoY
ASBL Projects 2QFY18 2QFY17 1QFY18 Yoy Qoq
Ahmednagar Aurangabad 64 74 64 -13% 0%
Dewas - - - - -
Katni 44 42 55 4% -21%
Indore Edalabad - - - - -
Wainganga 71 69 75 2% -6%
Others* 244 155 220 58% 11%
Total Toll Collection 415 366 492 13% -16%
Source: 2QFY18 Investor Presentation, Equirus Securities
* # - Others include Anawali-Kasegaon, Kognoli Toll Plaza, Nashirabad, 3 Foot Over Bridges in
Mumbai and Hebbalu toll plaza Katni project: Toll collection under High Court order for extension of period on account of claims,
not recognized as revenue Closed toll operations of Indore-Edalabad project post expiration of the concession period from
18 Feb’17
c) Average Daily Toll Collection for 2QFY18
Project (Rs mn) Sept'17 Sept'16 Jun'17 Growth YOY
Belgaum Dharwad 2.29 2.04 2.38 12%
Dhankuni –Kharagpur 8.32 7.24 8.73 15%
Bhandara 1.65 1.60 1.73 3%
Durg 2.03 2.08 2.11 -2%
Jaora–Nayagaon 5.52 4.67 5.27 18%
Sambalpur 1.56 1.35 1.61 -
Ahmednagar– Aurangabad 0.71 0.81 0.71 -13%
Wainganga Bridge 0.77 0.76 0.83 2%
Katni Bypass 0.48 0.46 0.61 4%
Others 2.69 1.70 2.44 58%
Total Toll Collections 26.02 22.73 26.43 14%
Source: 2QFY18 Investor Presentation, Equirus Securities
Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
______________________________________________________________________________________________________________________________________ November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 4 of 14
Exhibit 2: Order-book breakup over last nine quarters
A. BOT order book at Rs 23,356mn
Project/Quarter (Rs mn) 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18
Dhankuni 2,093 1,871 1,205 978 802 595 759 578 501
Annuity BOT - Bagewadi 2,780 2,779 2,779 2,674 2,543 2,484 2,214 1,946 1,619
Annuity BOT - Hungund 2,490 2,490 2,489 2,488 2,466 2,428 2,225 1,928 1,698
Hybrid Annuity - Ludhiana - - - - 12,737 12,286 11,669 10,496 9,894
Chennai ORR 1,276 877 537 161 36 - - 48 -
KSHIP 1,104 654 - 21 13 - - - -
ModhulNipani - - 316
- -
Sambalpur - - - - - - -
Hybrid Annuity- Anandpuram - - - - - - 9,200 9,194 9,117
Others - - - - - - 226 226 527
Total 9,743 8,671 7,326 6,322 18,597 17,793 26,293 24,190 23,356
Source: Investor Presentations, Equirus Securities
B. EPC (Roads) order book at Rs 20,457mn
Project/Quarter (Rs mn) 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18
Eastern Peripheral 7,890 7,883 7,873 7,779 7,131 6,382 5,348 3,902 3,292
Mumbai JNPT 4,140 4,138 4,129 3,974 3,834 3,711 3,167 2,771 2,457
Islampur 2,770 2,770 2,766 2,764 2,761 2,759 2,756 2,754 2,752
MoRTH–Badami 1,108 1,107 1,043 940 774 554 388 311 304
MoRTH–Madhugiri 2,129 2,121 1,964 1,662 1,294 1,067 777 550 358
Jharkhand –Dumka - - 2,113 2,090 2,037 1,928 1,768 1,504 1,404
Jharkhand –Govindpur - - 1,901 1,898 1,826 1,791 1,917 1,429 1,369
Jharkhand –Chaas - - - 4,860 4,854 4,826 4,552 5,003 4,989
Maharashtra - - - - - - - - -
Others 3,052 3,987 3,789 3,303 4,582 4,585 4,174 4,097 -
Total 21,089 22,006 25,578 29,270 29,093 27,603 24,847 22,321 20,457
Source: Investor Presentations, Equirus Securities
Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
______________________________________________________________________________________________________________________________________ November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 5 of 14
C. EPC(T&D) order book at Rs 17,288mn; execution affected in T&D projects due to GST-related issues, Bihar floods
Source: Investor Presentations, Equirus Securities
D. Total Order Book stands at Rs 61,101mn
Order-Book 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18
Total 44,444 41,865 41,106 42,504 55,204 62,204 70,047 64,329 61,101
Growth 57% -6% -2% 3% 30% 13% 13% -8% -5%
Source: Investor Presentations, Equirus Securities
Project/Quarter (Rs mn) 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18
Maharashtra 3,687 2,827 1,705 1,324 1,027 862 499 424 398
Bihar 7,304 5,965 4,796 4,129 3,529 12,661 12,613 11,890 11,501
Tamil Nadu 2,621 2,396 1,701 1,459 1,172 886 626 477 471
Uttar Pradesh - - - - 1,786 2,399 2,343 2,200 2,099
Jharkhand - - - - - - 2,827 2,827 2,820
Total 13,612 11,188 8,202 6,912 7,514 16,808 18,908 17,818 17,288
Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
______________________________________________________________________________________________________________________________________ November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 6 of 14
Valuation The current TP is contributed by (a) Rs 171/sh (Rs 154/sh earlier) for the standalone EPC
business and (b) Rs 148/sh (Rs 121/sh earlier) for the BOT portfolio.
Exhibit 2: Current SOTP Valuation
Valuation Details Valuation Stake Valuation Rs./share
Ashoka Buildcon Directly Owned
Operational Projects
Indore 4,099 100% 4,099 22
Aurangabad 215 100% 215 1
Dewas 1,304 100% 1,304 7
Wainganga 931 50% 466 2
Nashirabad 516 100% 516 3
Jaora 14,234 36.30% 5,167 28
ModhulNippani 696 61% 425 2
Value of Projects Directly Owned (A) 21,995 12,191 65
Ashoka Concessions (Valuation as on Mar 19)
Operational Projects
Bhandara 3,496 51% 1,783 10
PNG -
Jaora 14,234 38% 5,366 29
Durg 6,409 51% 3,269 17
Belgaum 4,980 100% 4,980 27
Dhankuni 11,790 100% 11,790 63
Sambalpur 1,136 100% 1,136 6
Value of Operational Projects (B) 42,045 28,324 151
Projects Under Execution
CORR 2,859 50% 1,429 8
Hybrid Annuity (Ludhiana + Ranasthalam) 2,055 100% 2,055 11
Value of Projects Under Execution (C) 4,914
3,484 19
Total Value of Ashoka Concessions (B + C) 46,958 31,808 170
Share of SBI Macquarie 12,405 66
Share of Ashoka Buildcon as on Mar 19 19,403 104
Holding Company Discount of 20% 3,881 21
Valuation post HC Discount (D) 15,522 83
BOT Project Valuation (A + D) 68,953
27,713 148
Standalone EPC Business (E) 32,091 32,091 171
Total Valuation (A + D + E)
58,402 320
Exhibit 3: Earlier SOTP Valuation
Valuation Details Valuation Stake Valuation Rs./share
Ashoka Buildcon Directly Owned
Operational Projects
Indore 3,898 100% 3,898 21
Aurangabad 222 100% 222 1
Dewas 1,264 100% 1,264 7
Wainganga 927 50% 463 2
Nashirabad 509 100% 509 3
Jaora 13,480 36.30% 4,894 26
ModhulNippani 616 61% 376 2
Value of Projects Directly Owned (A) 20,916 11,626 62
Ashoka Concessions (Valuation as on Mar 19)
Operational Projects
Bhandara 3,313 51% 1,690 9
PNG -
Jaora 13,480 38% 5,082 27
Durg 6,069 51% 3,095 17
Belgaum 4,715 100% 4,715 25
Dhankuni 6,592 100% 6,592 35
Sambalpur 1,030 100% 1,030 6
Value of Operational Projects (B) 35,200 22,204 119
Projects Under Execution
CORR 2,703 50% 1,352 7
Hybrid Annuity (Ludhiana + Ranasthalam) 2,055 100% 2,055 11
Value of Projects Under Execution (C) 4,758
3,407 18
Total Value of Ashoka Concessions (B + C) 39,958 25,611 137
Share of SBI Macquarie 11,740 63
Share of Ashoka Buildcon as on Mar 19 13,871 74
Holding Company Discount of 20% 2,774 15
Valuation post HC Discount (D) 11,097 59
BOT Project Valuation (A + D) 60,874
22,723 121
Standalone EPC Business (E) 28,871 28,871 154
Total Valuation (A + D + E)
51,594 276
Source: Equirus Securities
Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
______________________________________________________________________________________________________________________________________ November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 7 of 14
Earnings call takeaways
Industry update: Bharatmala to provide a boost to opportunities
The government has taken up multiple new initiatives for the infrastructure sector.
The Bharatmala Project, worth Rs 7trn and having a target of building 83,677kms of
roads, will provide a significant boost. The government has roped in NHAI, MORTH
and state bodies for timely execution and monitoring.
The quarter hasn’t seen much ordering, but H2FY18 is expected to be much better.
Update on financials: Revenue of Rs 2bn hit by one-offs
The following one-offs hit 2QFY18 revenues by Rs 2bn: (1) Owing to renegotiations
with vendors on account of GST, work in the Eastern Peripheral Project was halted
for 50 days. (2) Execution in power T &D projects was affected due to GST-related
issues, delay in material supplies and Bihar floods.
Project level debt is Rs 44.9bn while standalone debt is Rs 1.39bn. Of the standalone
debt, equipment loan is Rs 705mn and working capital loan Rs 693mn.
A scheduled tariff increase has happened for all projects. Belgaum, Dhankuni and
Sambalpur Project witnessed about 4-4.2% toll hike, while Dhankuni and Durg a 3.5%
toll hike. Jaora Project saw a 10% toll hike during the quarter.
Other expenses shot up during the quarter due to the additional toll collection
contract taken in Karnataka. The contract is for a one-year period i.e. upto May’18.
Guidance: FY18E revenue growth of 20-25% with margins of 13-15%
The company has maintained its target of achieving 20-25% revenue growth in 2018.
Contribution from road projects is likely to be higher with 25-30% growth, followed
by growth in power project revenues at 15-20%
The company looks forward to order inflows of Rs 30-40bn. Of this, it expects 80% to
be contributed by road projects.
Management expects a tax rate of 21% for FY18 and 22% for FY19. Post this, 80IA
benefits would not be available and hence the tax rate shall normalize.
YTD, the company has already incurred Rs 1bn on road projects. The remaining half
of the year shall see an investment of Rs 700mn and FY19 of Rs 1.1bn. CGD projects
would require equity investment of Rs 150mn by Mar’18 and Rs 150mn in FY19. Real
estate projects yet to be undertaken would require investments of Rs 1.20bn in
FY18, Rs 700mn in FY19 and Rs 500mn in FY20.
ASBL has already spent Rs 250mn on equipment capex YTD. It shall incur another
Rs 200mn in FY18 and Rs 500mn in FY19.
Average interest rate for BOT projects is 9.5%, and should reduce to 9.1% by May’18.
Update on projects
The top-7 unexecuted projects in the company’s order book are as follows:
Projects Value Rs. Mn
Bihar Power T&D 11,501 HAM – Ludhiana 9,894 HAM – Anandpuram 9,117 Jharkhand – Chaas 4,989 Eastern Peripheral 3,292 Jharkhand Power T&D 2,820 Islampur 2,752
Jharkhand Chaas: Execution will start in the current quarter at this project.
Islampur Bypass: While AD has been given, land acquisition is pending.
Chennai ORR: Annuities shall start flowing in from the next quarter.
Mumbai Airport: The company is yet to sign the lease agreement since certain
clarifications are pending.
Sambalpur: There were no one-offs here with growth driven by tariff increases.
Dhankuni & Belgaum Dharwad: Extension is expected for both projects; a concession
of full 20% shall be received.
Refinancing of Dhankuni, Kharagpur & Sambalpur: Interest rates have been brought
down to 10.1%. The reset date as of now is May’18 when the refinancing is expected
at 9-9.5%.
Other updates
Exit of SBI Macquarie may happen in Mar’18.
HAM Maharashtra Projects worth Rs 300bn are expected to be bid out. Other states
are also looking at this model.
Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
______________________________________________________________________________________________________________________________________ November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 8 of 14
Company Snapshot
How we differ from Consensus
- Equirus Consensus % Diff Comment
EPS FY18E 11.2 9.5 18 % Expect consensus estimates to
streamline with management guidance FY19E 11.7 11.3 4 %
Sales FY18E 24,963 26,927 -7 %
FY19E 30,739 31,974 -4 %
PAT FY18E 2,101 1,755 20 %
FY19E 2,189 2,120 3 %
Our Key Investment arguments: (1) Proven execution capability, (2) minimal downside
risk to BOT valuations due to high level of operational assets with traffic records and
dismal state of traffic growth, (3) high credibility proven by multiple PE deals across
cycles
Key Drivers FY17A FY18E FY19E FY20E
EPC Revenues 20,451 24,963 30,739 36,517
EPC EBITDA Margin 13% 13% 13% 13%
BOT Revenues 6,954 8,567 9,912 11,628
BOT EBITDA Margin 77% 81% 83% 85%
Order Book 70,067 67,934 92,728 96,305
Risk to Our View
Protracted policy paralysis, high interest rate regime and low order book execution.
Key Triggers
Revival in NHAI activity, NHAI restructuring package, moderation in interest rates,
gradual progress of BOT projects, and economic recovery.
Sensitivity to Key Variables % Change % Impact on EPS
EPC Revenues -10 % -8%
Toll Growth -10 % -22%
Interest Rate 100 bps -5%
DCF Valuations & Assumptions
Rf Beta Ke Term. Growth Debt/IC in Term. Yr
6.9 % 1.0 12.9 % 3.0 % 74.8 %
- FY18E FY19E FY20-22E FY23-27E FY28-32E
Sales Growth 13 % 21 % 8 % 7 % 5 %
NOPAT Margin 17 % 18 % 16 % 15 % 17 %
IC Turnover 1.08 0.91 1.00 1.61 2.31
RoIC 22.5 % 19.8 % 16.4 % 24.2 % 38.2 %
Years of strong growth 1 1 5 10 15
Valuation as on date (Rs) 121 133 105 214 275
Valuation as of Mar'19 143 157 124 252 326
Based on DCF, assuming 15 years of 15% CAGR revenue growth and 27% average ROIC, we
derive our current fair value of Rs 275 and a Mar’19 fair value of Rs 326.
Company Description:
Ashoka is one of the pioneers of BOT road projects and also does EPC contracting for
roads and power distribution. It has an order book of ~Rs 62bn and a portfolio of 17 BOT
projects, of which 16 are operational and one partially operational. It also has a small
RMC business and it utilizes the same for its captive construction.
Comparable valuation Mkt Cap
Rs. Mn.
Price
Target
Target
Date
EPS P/E BPS P/B RoE Div Yield
Company Reco. CMP FY17A FY18E FY19E FY17A FY18E FY19E FY17A FY18E FY17A FY18E FY19E FY17A FY18E
Ashoka Buildcon LONG 207 38,805 320 31st Mar'19 -0.5 13.7 21.0 -389.5 15.2 9.9 89.3 2.1 -1 % 14 % 20 % 0.4 % 1.0 %
Sadbhav Engg LONG 316 54,294 386 30th Sept'18 11.0 14.8 15.4 28.9 21.4 20.5 96.8 2.9 12 % 14 % 14 % 0.2 % 0.5 %
PNC Infratech Reduce 178 45,651 129 30th Sep 18 4.6 5.5 5.7 38.6 32.3 31.2 57.0 2.9 8 % 9 % 9 % 1.4 % 0.3 %
Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
______________________________________________________________________________________________________________________________________ November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 9 of 14
Standalone Quarterly Earnings Forecast and Key Drivers Rs in Mn 1Q17A 2Q17A 3Q17A 4Q17A 1Q18A 2Q18A 3Q18E 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E FY17A FY18E FY19E FY20E
Revenue 4,683 4,428 5,240 6,100 7,228 3,787 6,460 7,488 8,910 4,611 7,975 9,243 20,451 24,963 30,739 36,517
Operating Expenses 3,763 3,352 4,235 5,028 5,777 2,863 5,125 5,967 7,160 3,569 6,345 7,394 16,378 19,732 24,469 29,163
Employee Cost 198 207 244 252 269 247 300 309 331 301 371 382 901 1,125 1,384 1,644
Other Expenditure 86 171 142 184 208 171 194 225 267 138 239 277 575 797 922 1,096
EBITDA 636 697 620 636 975 506 841 987 1,151 602 1,020 1,190 2,597 3,309 3,963 4,616
Depreciation 123 130 107 147 113 130 135 138 141 143 145 147 507 517 577 612
EBIT 513 567 513 489 862 376 705 850 1,009 459 875 1,042 2,089 2,792 3,386 4,004
Interest 117 80 90 181 129 116 115 129 136 147 160 172 474 489 615 800
Other Income 82 92 117 432 92 108 71 63 25 28 56 39 719 333 148 153
PBT 478 580 540 740 824 368 661 783 898 340 772 909 2,338 2,637 2,919 3,356
Tax 170 125 111 82 205 41 132 157 224 85 193 227 488 535 730 839
Recurring PAT 308 455 429 658 619 327 529 627 673 255 579 682 1,850 2,101 2,189 2,517
Extraordinary 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Reported PAT 308 455 429 658 619 327 529 627 673 255 579 682 1,850 2,101 2,189 2,517
EPS (Rs) 1.64 2.43 2.29 3.42 3.31 1.75 2.82 3.35 3.60 1.36 3.09 3.64 9.79 11.23 11.70 13.45
Key Drivers
Standalone Revenues 4,683 4,428 5,240 6,100 7,228 3,787 6,460 7,488 8,910 4,611 7,975 9,243 20,451 24,963 30,739 36,517
Standalone EBITDA Margin 14 % 16 % 12 % 10 % 13 % 13 % 13 % 13 % 13 % 13 % 13 % 13 % 13 % 13 % 13 % 13 %
BOT Revenues -4,683 -4,428 1,739 14,327 2,270 1,928 2,185 2,185 2,627 2,230 2,528 2,528 6,954 8,567 9,912 11,628
BOT EBITDA Margin 77 % 77 % 77 % 77 % 81 % 81 % 81 % 81 % 83 % 83 % 83 % 83 % 77 % 81 % 83 % 85 %
Order Book 42,504 55,204 62,203 70,067 64,329 61,101 65,023 67,934 71,415 79,187 86,589 92,728 70,067 67,934 92,728 96,305
- - - - - - - - - - - - - - - - -
Sequential Growth (%)
Revenue -31 % -5 % 18 % 16 % 19 % -48 % 71 % 16 % 19 % -48 % 73 % 16 % - - - -
Operating Expenses -32 % -11 % 26 % 19 % 15 % -50 % 79 % 16 % 20 % -50 % 78 % 17 % - - - -
EBITDA -29 % 10 % -11 % 3 % 53 % -48 % 66 % 17 % 17 % -48 % 69 % 17 % - - - -
EBIT -32 % 11 % -10 % -5 % 76 % -56 % 88 % 20 % 19 % -55 % 91 % 19 % - - - -
Recurring PAT -55 % 48 % -6 % 53 % -6 % -47 % 62 % 19 % 7 % -62 % 127 % 18 % - - - -
EPS -55 % 48 % -6 % 49 % -3 % -47 % 62 % 19 % 7 % -62 % 127 % 18 % - - - -
Yearly Growth (%)
Revenue -15 % 23 % 36 % -10 % 54 % -14 % 23 % 23 % 23 % 22 % 23 % 23 % 4 % 22 % 23 % 19 %
EBITDA -8 % 67 % 25 % -29 % 53 % -27 % 36 % 55 % 18 % 19 % 21 % 20 % 4 % 27 % 20 % 16 %
EBIT -8 % 101 % 47 % -35 % 68 % -34 % 37 % 74 % 17 % 22 % 24 % 23 % 7 % 34 % 21 % 18 %
Recurring PAT -9 % 81 % 195 % -4 % 101 % -28 % 23 % -5 % 9 % -22 % 10 % 9 % 30 % 14 % 4 % 15 %
EPS -9 % 81 % 195 % -7 % 101 % -28 % 23 % -2 % 9 % -22 % 10 % 9 % 29 % 15 % 4 % 15 %
Margin (%)
EBITDA 14 % 16 % 12 % 10 % 13 % 13 % 13 % 13 % 13 % 13 % 13 % 13 % 13 % 13 % 13 % 13 %
EBIT 11 % 13 % 10 % 8 % 12 % 10 % 11 % 11 % 11 % 10 % 11 % 11 % 10 % 11 % 11 % 11 %
PBT 10 % 13 % 10 % 12 % 11 % 10 % 10 % 10 % 10 % 7 % 10 % 10 % 11 % 11 % 9 % 9 %
PAT 7 % 10 % 8 % 11 % 9 % 9 % 8 % 8 % 8 % 6 % 7 % 7 % 9 % 8 % 7 % 7 %
Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
______________________________________________________________________________________________________________________________________ November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 10 of 14
Consolidated Financials Forecast
P&L (Rs Mn) FY17A FY18E FY19E FY20E
Balance Sheet (Rs Mn) FY17A FY18E FY19E FY20E
Cash Flow (Rs Mn) FY17A FY18E FY19E FY20E
Revenue 29,753 33,530 40,651 48,145 Equity Capital 936 936 936 936 PBT -464 3,381 4,835 5,281
Op. Expenditure 20,806 23,253 28,426 33,606 Reserve 15,781 17,886 19,991 22,096 Depreciation 2,735 2,876 3,147 4,391
EBITDA 8,946 10,277 12,225 14,539 Networth 16,717 18,822 20,927 23,032 Others 8,125 0 0 0
Depreciation 2,735 2,876 3,147 4,391 Long Term Debt 46,370 48,314 50,460 49,614 Taxes Paid -744 786 730 839
EBIT 6,211 7,401 9,077 10,148 Def Tax Liability 28,503 80,017 81,866 81,091 Change in WC -2,608 -1,500 -2,147 -2,196
Interest Expense 7,899 4,353 4,391 5,020 Minority Interest 4,490 4,530 4,711 5,059 Operating C/F 7,044 3,971 5,105 6,637
Other Income 1,224 333 148 153 Account Payables 5,744 7,013 8,587 10,148 Capex -1,419 -52,327 -1,600 -17,800
PBT -464 3,381 4,835 5,281 Other Curr Liabi 9,642 2,235 2,710 3,210 Change in Invest 108 -5,093 -4,513 15,363
Tax 790 786 730 839 Total Liabilities & Equity 111,466 160,932 169,261 172,154 Others 742 51,514 1,849 -774
PAT bef. MI & Assoc. -1,254 2,596 4,105 4,442 Net Fixed Assets 83,695 133,511 131,964 145,373 Investing C/F -569 -5,906 -4,264 -3,211
Minority Interest -1,154 40 180 348 Capital WIP 366 0 0 0 Change in Debt 653 1,944 2,146 -846
Profit from Assoc. 0 0 0 0 Others 5,440 10,533 15,045 -318 Change in Equity 0 0 -1,313 -1,425
Recurring PAT -100 2,556 3,925 4,093
Inventory 12,036 8,268 10,023 11,871 Others -8,088 -2,469 -507 -563
Extraordinaires 0 0 0 0 Account Receivables 4,910 2,756 3,341 3,957 Financing C/F -7,435 -525 326 -2,834
Reported PAT -100 2,556 3,925 4,093 Other Current Assets 3,596 4,881 6,736 8,529 Net change in cash -960 -2,460 1,167 591
FDEPS (Rs) -0.5 13.7 21.0 21.9 Cash 1,424 983 2,151 2,742 RoE (%) -1 % 14 % 20 % 19 %
DPS (Rs) 0.8 2.0 2.3 2.3 Total Assets 111,466 160,932 169,261 172,154
RoIC (%) 30 % 8 % 10 % 11 %
CEPS (Rs) 14.1 29.0 37.8 45.3 Non-cash Working Capital 5,156 6,656 8,803 10,999
Core RoIC (%) 20 % 22 % 20 % 16 %
FCFPS (Rs) 148.6 7.5 24.4 40.9 Cash Conv Cycle 63.3 72.5 79.0 83.4 Div Payout (%) -151 % 18 % 13 % 14 %
BVPS (Rs) 89.3 100.6 111.8 123.1 WC Turnover 5.8 5.0 4.6 4.4 P/E -389.5 15.2 9.9 9.5
EBITDAM (%) 30 % 31 % 30 % 30 % FA Turnover 0.4 0.3 0.3 0.3 P/B 2.3 2.1 1.9 1.7
PATM (%) 0 % 8 % 10 % 9 % Net D/E 2.7 2.5 2.3 2.0 P/FCFF 1.4 27.6 8.5 5.1
Tax Rate (%) -170 % 23 % 15 % 16 % Revenue/Capital Employed 0.5 0.5 0.6 0.7 EV/EBITDA 9.6 8.4 7.1 5.9
Sales Growth (%) 5 % 13 % 21 % 18 %
Capital Employed/Equity 4.2 4.2 4.1 4.0
EV/Sales 2.9 2.6 2.1 1.8
FDEPS Growth (%) -65 % -2,665 % 54 % 4 %
Dividend Yield (%) 0.4 % 1.0 % 1.1 % 1.1 %
TTM P/E vs. 2 yrs. forward EPS growth TTM EV/EBITDA vs. 2 yrs. forward EBITDA growth TTM P/B vs. 2 yrs. forward RoE
-50%
-20%
10%
40%
70%
100%
130%
160%
190%
-100
0
100
200
300
400
500
600
700
800
900
Mar/14
Jun/14
Sep/14
Dec/14
Mar/15
Jun/15
Sep/15
Dec/15
Mar/16
Jun/16
Sep/16
Dec/16
Mar/17
Jun/17
Sep/17
Dec/17
Mar/18
Jun/18
Sep/18
Dec/18
Mar/19
10x
20x
27x
32x
35x
EPS Growth
6x
0%
10%
20%
30%
40%
50%
60%
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
Mar/
14
Jun/14
Sep/14
Dec/14
Mar/
15
Jun/15
Sep/15
Dec/15
Mar/
16
Jun/16
Sep/16
Dec/16
Mar/
17
Jun/17
Sep/17
Dec/17
Mar/
18
Jun/18
Sep/18
Dec/18
Mar/
19
8x
10x
12x
14xEBITDA Growth
2x
-10%
0%
10%
20%
30%
-
50
100
150
200
250
300
350
400
Mar/
14
Jun/14
Sep/14
Dec/
14
Mar/
15
Jun/15
Sep/15
Dec/
15
Mar/
16
Jun/16
Sep/16
Dec/
16
Mar
/17
Jun/17
Sep/17
Dec/
17
Mar/
18
Jun/18
Sep/18
Dec/
18
Mar/
19
1.5x
3x
RoE
1x
2.5x
Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
______________________________________________________________________________________________________________________________________ November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 11 of 14
Historical Consolidated Financials
P&L (Rs Mn) FY14A FY15A FY16A FY17A
Balance Sheet (Rs Mn) FY14A FY15A FY16A FY17A
Cash Flow (Rs Mn) FY14A FY15A FY16A FY17A
Revenue 17,949 23,197 28,249 29,753 Equity Capital 790 793 936 936 PBT 1,394 782 -1,263 -464
Op. Expenditure 14,003 18,467 19,066 20,806 Reserve 11,839 13,265 16,210 15,781 Depreciation 1,389 1,517 2,690 2,735
EBITDA 3,945 4,730 9,183 8,946 Networth 12,628 14,058 17,146 16,717 Others 1,814 3,790 8,700 8,125
Depreciation 1,389 1,517 2,690 2,735 Long Term Debt 31,926 41,952 44,236 46,370 Taxes Paid -702 -874 -1,095 -744
EBIT 2,556 3,213 6,492 6,211 Def Tax Liability 78,326 26,789 27,307 28,503 Change in WC -38 -1,317 -6,524 -2,608
Interest Expense 1,335 2,721 7,996 7,899 Minority Interest 4,645 6,720 5,625 4,490 Operating C/F 3,858 3,899 2,507 7,044
Other Income 89 290 811 1,224 Account Payables 5,701 7,046 5,400 5,744 Capex -10,802 -8,872 -1,089 -1,419
PBT 1,310 782 -692 -464 Other Curr Liabi 1,956 8,226 10,057 9,642 Change in Invest -25 231 -200 108
Tax 688 796 974 790 Total Liabilities & Equity 135,183 104,790 109,770 111,466 Others 1,605 519 246 742
PAT bef. MI & Assoc. 622 -14 -1,666 -1,254 Net Fixed Assets 40,250 86,514 85,148 83,695 Investing C/F -9,222 -8,122 -1,043 -569
Minority Interest -425 -828 -1,383 -1,154 Capital WIP 79,621 422 200 366 Change in Debt 7,391 6,811 3,826 653
Profit from Assoc. -72 0 0 0 Others 5,007 4,044 5,427 5,440 Change in Equity 0 -106 5,005 0
Recurring PAT 974 815 -283 -100 Inventory 6,272 7,324 10,731 12,036 Others -1,601 -3,011 -8,581 -8,088
Extraordinaires 0 0 570 0 Account Receivables 1,305 4,424 5,161 4,910 Financing C/F 5,790 3,694 250 -7,435
Reported PAT 974 815 -854 -100 Other Current Assets 888 1,470 692 3,596 Net change in cash 425 -530 1,715 -960
EPS (Rs) 5.2 4.4 -1.5 -0.5 Cash 1,840 592 2,412 1,424
RoE (%) 8 % 6 % -2 % -1 %
DPS (Rs) 1.3 0.7 2.2 0.8
Total Assets 135,182 104,790 109,770 111,466
RoIC (%) 4 % 1 % 29 % 30 %
CEPS (Rs) 15.0 14.7 12.9 14.1 Non-cash Working Capital 807 -2,053 1,127 5,156 Core RoIC (%) 1 % 3 % 26 % 20 %
FCFPS (Rs) -30.0 -26.9 110.6 148.6 Cash Conv Cycle 16.4 -32.3 14.6 63.3 Div Payout (%) 22 % 14 % -48 % -151 %
BVPS (Rs) 80.0 88.6 91.6 89.3 WC Turnover 22.2 -11.3 25.1 5.8
P/E 39.8 47.6 -136.9 -389.5
EBITDAM (%) 22 % 20 % 33 % 30 % FA Turnover 0.1 0.3 0.3 0.4 P/B 2.6 2.3 2.3 2.3
PATM (%) 5 % 4 % -1 % 0 % Net D/E 2.4 2.9 2.4 2.7 P/FCFF -6.9 -7.7 1.9 1.4
Tax Rate (%) 53 % 102 % -141 % -170 % Revenue/Capital Employed 0.5 0.5 0.5 0.4 EV/EBITDA 37.5 22.6 12.0 9.6
Sales growth (%) -3 % 29 % 22 % 5 %
Capital Employed/Equity 3.2 3.8 4.2 4.2
EV/Sales 8.3 4.6 3.9 2.9
FDEPS growth (%) 16 % -16 % -135 % -65 %
Dividend Yield (%) 0.6 % 0.3 % 1.1 % 0.4 %
Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
______________________________________________________________________________________________________________________________________ November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 12 of 14
Equirus Securities
Research Analysts Sector/Industry Email
Equity Sales E-mail
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Ashutosh Tiwari Auto, Metals & Mining [email protected] 91-79-61909517 Subham Sinha [email protected] 91-22-43320631
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Rating & Coverage Definitions: Absolute Rating • LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap > Rs 5 billion and ATR >= 20% for rest of the companies • ADD: ATR >= 5% but less than Ke over investment horizon • REDUCE: ATR >= negative 10% but <5% over investment horizon • SHORT: ATR < negative 10% over investment horizon Relative Rating • OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon • BENCHMARK: likely to perform in line with the benchmark • UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon Investment Horizon Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on last day of a calendar quarter. Lite vs. Regular Coverage vs. Spot Coverage We aim to keep our rating and estimates updated at least once a quarter for Regular Coverage stocks. Generally, we would have access to the company and we would maintain detailed financial model for Regular coverage companies. We intend to publish updates on Lite coverage stocks only an opportunistic basis and subject to our ability to contact the management. Our rating and estimates for Lite coverage stocks may not be current. Spot coverage is meant for one-off coverage of a specific company and in such cases, earnings forecast and target price are optional. Spot coverage is meant to stimulate discussion rather than provide a research opinion.
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Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
______________________________________________________________________________________________________________________________________ November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 13 of 14
© 2017 Equirus Securities Private Limited. All rights reserved. For Private Circulation only. This report or any portion hereof may not
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Analyst Certification
I, Devam Modi, author to this report, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also
certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
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Ashoka Buildcon Ltd. Absolute – LONG Relative – Overweight 38% ATR in 17 months
______________________________________________________________________________________________________________________________________ November 13, 2017 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 14 of 14
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