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Ashoka Buildcon: Worth A Wait
Ashoka Buildcon: Worth A Wait
Ashoka Buildcon: Worth A Wait
06 DEC 2016
Ashoka Buildcon
BUY
INDUSTRY
INFRASTRUCTURE
Rs 144
Target Price
Rs 210
Nifty
8,129
Sensex
26,349
ASBL IN
187
27/398
36
Rs 212/111
3M
6M
12M
Absolute (%)
(9.1)
9.4
(25.5)
Relative (%)
(1.5)
11.2
(28.3)
56.69
23.81
FIIs
Public & Others
8.44
11.06
Source : BSE
Parikshit D Kandpal
parikshitd.kandpal@hdfcsec.com
+91-22-6171-7317
Prabhat Anantharaman
prabhat.anantharaman@hdfcsec.com
+91-22-6171-7319
Worth a wait
ABL 2QFY17 standalone financial performance was
above expectations as EBITDA (+7.0% YoY) came
25.4% ahead of our estimates, mainly on account of
Rs 160mn saving achieved on six month early
completion of Bihar T&D project. EBITDA margins
expanded ~187bps YoY to 15.8% (~337bps ahead of
our estimates) led by ~382bps YoY contraction raw
material costs (Bihar project).
ABLs YTDFY17 order inflow stood at Rs 19.4bn (~55%
of our FY17E assumption). ABL has guided for FY17E
12-12.5% EPC EBITDA margins vs. our forecast of
~12.1%. We expect revenues to pick-up as execution
at JNPT/eastern peripheral projects improve and
new projects achieve financial closure.
Delays in Jharkhand/Islampur project (Rs 11.5bn)
have led to ABL cutting FY17E EPC revenue growth to
5-8% (vs. 10-15% earlier). We roll forward our
valuation to Sep-18E. Maintain BUY with SOTP-based
TP of Rs 210/sh (vs. Rs 202/sh earlier).
Financial Summary (Standalone)
Year Ending March (Rs mn)
Net Sales
EBITDA
APAT
Diluted EPS (Rs)
P/E (x)
EV / EBITDA (x)
RoE (%)
2QFY17
4,410
698
453
2.4
2QFY16
4,674
652
315
1.7
YoY (%)
(5.7)
7.0
43.9
43.9
1QFY17
4,660
596
308
1.6
QoQ (%)
(5.4)
17.1
47.1
47.1
FY16*
26,145
7,435
1,155
6.2
23.3
9.2
7.2
FY17E*
27,030
7,799
1,233
6.6
21.9
8.7
6.5
FY18E*
30,561
8,279
1,405
7.5
19.2
8.5
7.0
FY19E*
34,291
8,907
1,664
8.9
16.2
8.2
7.9
HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters
2QFY17
4,410
3,352
207
171
680
17
698
130
568
90
80
578
125
453
453
2QFY16
4,674
3,731
180
112
651
1
652
165
487
93
127
453
138
315
315
YoY (%)
(5.7)
(10.2)
15.1
51.8
4.6
1,100.8
7.0
(21.4)
16.7
(3.1)
(37.1)
27.7
(9.5)
43.9
43.9
1QFY17
76.0
4.7
3.9
15.4
0.4
15.8
21.6
10.3
1QFY16
79.8
3.9
2.4
13.9
0.0
13.9
30.4
6.7
YoY (bps)
(382)
85
146
151
37
187
(885)
354
1QFY17
4,660
3,763
198
126
572
24
596
123
472
82
76
478
170
308
308
QoQ (%)
(5.4)
(10.9)
4.4
35.6
18.9
(26.5)
17.1
5.3
20.2
10.4
4.8
21.0
(26.5)
47.1
47.1
1HFY17
9,070
7,116
406
297
1,252
41
1,293
253
1,040
172
156
1,056
294
762
762
1HFY16
9,423
7,548
346
203
1,326
4
1,330
304
1,026
324
271
1,080
307
773
773
YoY (%)
(3.7)
(5.7)
17.4
46.4
(5.6)
913.4
(2.8)
(16.6)
1.3
(47.0)
(42.2)
(2.3)
(4.3)
(1.5)
(1.5)
Margin Analysis
Material Expenses % Net Sales
Employee Expenses % Net Sales
Other Op Expenses % Net Sales
Operating Margins (%)
Other Op Income % Net Sales
EBITDA Margin (%)
Tax Rate (%)
APAT Margin (%)
1HFY17
78.5
4.5
3.3
13.8
0.5
14.3
27.9
8.4
1HFY16
80.1
3.7
2.2
14.1
0.0
14.1
28.4
8.2
YoY (bps)
(166)
80
112
(27)
41
14
(58)
19
Rs mn
Opening Order Book
Add: New Order Wins
Less: Orders Executed
Closing Order Book
Order Book/Sales (x)
We have assumed Rs
40/46/50bn of new order
inflow during FY17/18/19E
Roads - BOT
100%
Roads - EPC
Roads - HAM
YTDFY17
41,106
19,390
9,070
55,204
2.9
FY17E
41,106
40,918
20,033
61,991
3.1
FY18E
61,991
45,828
23,663
84,156
3.6
FY19E
84,156
50,410
27,242
107,324
3.9
Power T&D
Roads - BOT
Roads - EPC
Roads - HAM
YTDFY17
4QFY16
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
1QFY14
YTDFY17
4QFY16
3QFY16
0%
2QFY16
0%
1QFY16
20%
4QFY15
20%
3QFY15
40%
2QFY15
40%
1QFY15
60%
4QFY14
60%
3QFY14
80%
2QFY14
100%
80%
2QFY14
1QFY14
FY16
32,126
28,219
19,239
41,106
2.1
Page | 3
8.0
4.0
6.0
3.0
4.0
2.0
2.0
1.0
40.0
30.0
20.0
10.0
FY19E
FY18E
FY11
FY19E
FY18E
FY17E
FY16
FY15
FY14
FY13
FY12
FY11
50.0
FY17E
30
60.0
FY16
45
70.0
FY15
60
8.0
30
1.5
6.0
20
1.0
4.0
(2.0)
10
0.5
2.0
6.0
4.0
2.0
(4.0)
(6.0)
FY19E
FY18E
FY17E
(8.0)
FY16
FY15
FY19E
2.0
FY18E
40
FY17E
10.0
FY16
2.5
FY15
50
FY14
3.0
FY13
60
FY12
5.0
80.0
FY14
75
10.0
FY13
90
6.0
FY12
120
FY11
15
105
FY14
NH-4-Belgaum Dharwad
NH-6-Sambalpur Baragarh
NH-6-Dhankuni Kharagpur
NH-6-Durg (Chattisgarh - Maharashtra)
NH-6-Bhandara (Maharashtra Chattisgarh)
SH-31-Jaora Nayagaon
Chennai ORR
Total Ashoka Concessions @ 61% stake
ABL-Ahmednagar-Aurangabad
ABL-Nashirabad
VHPL-Indore Edalabad
JAIPL-Wainganga
SH-31-Jaora Nayagaon
Total ABL Projects
TOTAL BOT Value
Stake (%)
WACC (%)
100
100
100
51
51
38
50
14
14
14
14
14
14
14
14
14
14
14
14
14
100
100
100
50
36
Project
Value (Rs mn)
2,075
(987)
4,176
1,313
592
13,985
1,810
22,964
242
120
851
707
13,985
15,906
38,870
Page | 5
Key Assumptions
(Rs mn)
Order-book (INR mn)
Opening Order Book
FY17E
FY18E
FY19E
41,106
61,991
84,156
FY19E
Comments
45.0
12.0
50.8
35.8
4.1
(5.6)
18.1
(7.6)
11.8
(12.2)
23.2
590
409
662
523
5.1
(21.9)
12.1
3.6
266
312
366
75.3
17.2
1,989
9.9
597
30.0
1,392
7.0
2,176
9.2
653
30.0
1,523
6.4
2,382
21.3
8.7
16.5
739
31.0 (260.7bps)
1,644
26.0
6.0
120.5bps
9.4
(7.4)
40,918
45,828
50,410
20,033
61,991
3.1
20,033
2,644
23,663
84,156
3.6
23,663
2,863
27,242
107,324
3.9
27,242
3,201
13.2
12.1
Depreciation
Financial Charges
527
395
Other income
PBT
PBT margin (%)
Tax
Tax rate (%)
PAT
PAT margin (%)
Growth%
FY17E
FY18E
(0.0bps)
9.4
(51.3bps)
Page | 6
Toll revenue
EPC revenue
Total Revenue
6,997
6,898
7,049
(0.0)
(1.4)
2.2
4.1
3.0
18.1
13.1
15.1
12.2
EBIDTA Toll
5,155
5,415
5,706
4.4
5.1
5.4
EBIDTA EPC
Total EBIDTA
2,644
7,799
2,863
8,279
3,201
8,907
6.0
4.9
8.3
6.1
11.8
7.6
73.7
78.5
81.0
310.0
483.3
244.5
13.2
12.1
11.8
23.2 (110.0)
(35.0)
28.9
27.1
26.0
2,397
2,737
3,025
Depreciation
Financial Charges
Growth%
FY17E FY18E FY19E FY17E FY18E FY19E
(3.8)
14.2
5,055
4,903
4,814
12.9
(3.0)
Other income
PBT
573
920
584
1,222
593
1,661
63.4
32.9
3.4
4.0
4.8
58.6
17.5
Tax
988
932
974
1.5
(5.7)
107.4
76.2
58.6
Comments
Muted growth in toll revenues during FY17-19E as
ABLs direct projects near end of concession period
viz. Indore, Ahmednagar, Wainganga etc. This will
result in Rs 1.8bn/yr reduction in toll revenue in/from
FY18E
16.6% FY17-19E EPC revenue CAGR
12.6% FY17-19E revenue CAGR
5.2% FY17-19E EBIDTA CAGR as all toll projects start
contributing to revenues.
10.0% FY17-19E EPC EBIDTA CAGR
6.8% FY17-18E EBIDTA CAGR
Margins expansion in line with growth in high margin
toll revenue
EPC margins contraction as share of captive BOTs
will reduce , third party increase
ABL margins will reduce during FY17-19E as ABL
direct toll project will end & EPC margins will
compress as NHAI EPC projects share increase in
revenue.
10.5
Borrowing cost reduction in FY18E as EPC projects
(1.8) won by ABL are interest-free , besides BOT projects
may get refinanced at lower interest rates
Dividend on cash and deposits
35.9 FY17-19E PBT CAGR of 34.4%
PBT margin expansion owing to benefit in financial
21.1 expenses. Refinancing is the key reason for the
margins gain
4.6
Tax rate to remain high as MAT is incurred on
profitable BOT projects, while losses offset standalone
profits
Page | 7
PAT
Profit/(Loss) Minority
Net Profit
Gross Block Turnover
Debtor days
CFO - a
CFI - b
FCF - a+b
CFF - c
Total change in cash - a+b+c
Growth%
FY16E FY17E FY18E
687
-
291
(902)
(677)
(455)
399
438
522
647
6.8
3.1
(3.8)
14.0
14.2
(4.2)
Comments
332
Rs mn
Revenues
EBIDTA
EBIDTA Margins (%)
APAT
Adj. EPS (INR)
FY17E Old
28,544
7,566
26.5
948
5.1
FY17E New
27,030
7,799
28.9
1,233
6.6
% Change
(5.3)
3.1
235.0
30.0
30.0
FY18E Old
31,704
8,007
25.3
1,118
6.0
FY18E New
30,561
8,279
27.1
1,405
7.5
% Change
(3.6)
3.4
183.3
25.7
25.7
FY18E New
23,663
2,863
12.1
1,523
8.1
% Change
(4.6)
0.4
60
9.6
9.6
FY17E Old
21,548
2,607
12.1
1,213
6.5
FY17E New
20,033
2,644
13.2
1,392
7.4
% Change
(7.0)
1.4
110.0
14.8
14.8
FY18E Old
24,806
2,853
11.5
1,390
7.4
Page | 8
SOTP Valuation
Segment
Project
Value (Rs mn)
22,964
15,906
38,851
Comments
DCF using 14% WACC
DCF using 14% WACC
Standalone 15x Sept-18E EPS
0.5x P/BV
Page | 9
FY15
23,197
29.2
16,712
754
1,001
4,730
20.4
23.8
1,517
3,213
290
2,721
782
796
(13)
FY16
26,145
12.7
16,850
924
936
7,435
28.4
57.2
2,491
4,943
98
4,478
563
973
(410)
FY17E
27,030
3.4
17,552
1,017
662
7,799
28.9
1.5
2,397
5,402
573
5,055
920
988
(68)
FY18E
30,561
13.1
20,494
1,119
669
8,279
27.1
(6.1)
2,737
5,541
584
4,903
1,222
932
291
FY19E
34,291
12.2
23,499
1,202
683
8,907
26.0
(4.1)
3,025
5,882
593
4,814
1,661
974
687
(828)
(995)
(902)
(677)
(455)
399
438
522
815
(28.0)
4.4
(28.0)
570
1,155
41.7
6.2
41.7
1,233
6.8
6.6
6.8
1,405
14.0
7.5
14.0
1,664
18.4
8.89
18.4
FY15
FY16
FY17E
FY18E
FY19E
793
12,776
13,569
5,047
35,837
2,889
38,726
(99)
57,244
936
17,752
18,688
4,995
39,885
2,892
42,777
(221)
66,238
936
18,547
19,483
4,094
42,885
2,892
45,777
(221)
69,132
936
19,514
20,450
3,417
45,885
2,892
48,777
(221)
72,422
936
20,740
21,676
2,962
48,885
2,892
51,777
(221)
76,193
3,437
3,521
3,606
2,345
3,377
3,377
3,377
3,377
129,562 132,663 133,248 133,594 133,654
7,286 10,890
9,105
9,861 11,105
3,644
3,660
3,642
3,945
4,442
410
1,679
4,531
5,177
6,031
5,607
4,791
6,886
7,699
8,796
16,947 21,020 24,165 26,683 30,374
6,332
4,054
7,284
7,889
8,884
82,934 83,390 80,996 79,965 78,951
89,265 87,445 88,280 87,855 87,835
(72,319) (66,425) (64,116) (61,172) (57,461)
57,244 66,238 69,132 72,422 76,193
Page | 10
FY16
563
806
4,478
2,491
(1,949)
(1,095)
5,295
(4,546)
749
(1,492)
(6,038)
4,916
1,276
(4,478)
(338)
1,375
632
1,679
FY17E
920
(174)
5,055
2,397
543
(988)
7,754
(2,982)
4,772
573
(2,409)
3,000
(5,055)
(438)
(2,493)
2,852
4,531
FY18E
1,222
(146)
4,903
2,737
(2,297)
(932)
5,487
(3,084)
2,403
584
(2,500)
3,000
(4,903)
(438)
(2,341)
647
5,177
FY19E
1,661
(71)
4,814
3,025
(2,792)
(974)
5,663
(3,151)
2,512
593
(2,558)
3,000
(4,814)
(438)
(2,251)
854
6,031
PROFITABILITY (%)
GPM
EBITDA Margin
EBIT Margin
APAT Margin
RoE
RoIC
RoCE
EFFICIENCY
Tax Rate (%)
Fixed Asset Turnover (x)
Inventory (days)
Debtors (days)
Other Current Assets (days)
Payables (days)
Other Curnt Liab/Provns
(days)
Cash Conversion Cycle (days)
Debt/EBITDA (x)
Net D/E
Interest Coverage
PER SHARE DATA
EPS (Rs/sh)
CEPS (Rs/sh)
DPS (Rs/sh)
BV (Rs/sh)
VALUATION
P/E
P/BV
EV/EBITDA
EV/Revenues
OCF/EV (%)
FCF/EV (%)
FCFE/Market Cap (%)
Dividend Yield (%)
FY15
FY16
FY17E
FY18E
FY19E
28.0
20.4
13.8
3.5
6.2
(0.1)
1.4
35.6
28.4
18.9
4.4
7.2
(6.2)
(3.4)
35.1
28.9
20.0
4.6
6.5
(0.6)
1.3
32.9
27.1
18.1
4.6
7.0
2.1
3.6
31.5
26.0
17.2
4.9
7.9
3.7
4.9
101.7
0.2
115
57
88
100
172.9
0.2
152
51
67
57
107.4
0.2
123
49
93
98
76.2
0.2
118
47
92
94
58.6
0.2
118
47
94
95
128
143
121
107
96
33
8.2
2.8
1.2
70
5.8
2.2
1.1
46
5.9
2.1
1.1
55
5.9
2.1
1.1
68
5.8
2.1
1.2
4.4
12.5
1.5
72.5
6.2
19.5
1.8
99.9
6.6
19.4
2.0
104.1
7.5
22.1
2.0
109.3
8.9
25.1
2.0
115.8
33.1
2.0
13.8
2.8
0.1
(7.6)
(3.3)
1.0
23.3
1.4
9.2
2.6
0.1
1.1
(9.1)
1.2
21.9
1.4
8.7
2.5
0.1
7.0
10.1
1.4
19.2
1.3
8.5
2.3
0.1
3.4
1.9
1.4
16.2
1.2
8.2
2.1
0.1
3.5
2.6
1.4
Page | 11
RECOMMENDATION HISTORY
Date
3-Feb-16
23-May-16
30-Aug-16
6-Dec-16
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
TP
Jul-16
Jun-16
May-16
Apr-16
Mar-16
Feb-16
Dec-15
240
220
200
180
160
140
120
100
Jan-16
Ashoka Buildcon
CMP
184
136
156
144
Reco
BUY
BUY
BUY
BUY
Target
215
202
202
210
Rating Definitions
BUY
: Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL
: Where the stock is expected to deliver less than (-)10% returns over the next 12 month period
Page | 12
Disclosure:
We, Parikshit Kandpal, MBA, & Prabhat Anantharaman, MS (Finance) authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report
accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific
recommendation(s) or view(s) in this report.
Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its
Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further
Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest.
Any holding in stock No
Disclaimer:
This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or
arrived at, based upon information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of
warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for
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