RESULTS REVIEW 1QFY17

30 AUG 2016

Ashoka Buildcon
BUY
INDUSTRY

INFRASTRUCTURE

CMP (as on 30 Aug 2016)

Rs 156

Target Price

Rs 202

Nifty

8,744

Sensex

28,343

KEY STOCK DATA

Bloomberg

ASBL IN

No. of Shares (mn)

187

MCap (Rs bn) / ($ mn)

29/436

6m avg traded value (Rs mn)

72

STOCK PERFORMANCE (%)

52 Week high / low

Rs 212/111
3M

6M

12M

Absolute (%)

14.6

(11.5)

(12.9)

Relative (%)

8.5

(34.7)

(20.3)

SHAREHOLDING PATTERN (%)

Promoters

56.69

FIs & Local MFs

23.06

FIIs
Public & Others

8.05
12.20

Source : BSE

Parikshit D Kandpal
parikshitd.kandpal@hdfcsec.com
+91-22-6171-7317
Prabhat Anantharaman
prabhat.anantharaman@hdfcsec.com
+91-22-6171-7319

Execution slip
Ashoka Buildcon Ltd. (ABL), 1QFY17 financial
performance was impacted by delays in execution
pickup in recent order wins, resulting in lower EPC
revenue (-3.4% YoY). EBITDA margins declined
~150bps YoY to 12.8% led by ~293bps YoY
contraction in EPC margins to ~10.9%.
ABLs YTDFY17 order inflow stood at Rs 20.9bn i.e.
~59% of our FY17E order inflow estimate. Recent
project wins are an indication of ABLs conservative
stance, with its bids being not only ~1-6% above
NHAIs benchmark costs but also within 2-9% range
of L2 bidder.
Consequently, we expect ABLs FY17E EPC EBITDA
margins recovery to ~12.1% primarily on account of
the new order crossing margin recognition threshold.
ABL didnt recognize margin on Rs 400mn of revenue
during 1QFY17 as margin threshold was not met.
Maintain BUY with SOTP-based TP of Rs 202/share.

Meeting key takeaways

BOTs toll picking up, minimal pending equity:

ABL has Rs 2.6bn of pending equity requirement

(incl. Ludhiana HAM) over the next 3 years.
1QFY17 BOT collections grew ~8.4% YoY to Rs
2.4bn. With ABL receiving full COD for its
Sambalpur BOT project and ~20% hike in toll rate
we expect toll growth to further pick in 2QFY17E.

Balance

sheet
stable:
ABL
standalone
/consolidated gross debt reduced Rs 1,410
/1,281mn QoQ to Rs 2.6/39.7bn. With WPI turning
positive and toll growth picking pace, ABL should
be able to improve cashflows & BS further.

Near-term outlook: (1) Economic recovery has

started reflecting on toll collections, (2) FY17E
started on a positive note with new order win (Rs
20.9bn) ~1-6% higher than NHAI cost, and (3)
Balance sheet has been improving. We remain
positive on the stock.

Financial Summary (Standalone)

Year Ending March (Rs mn)
Net Sales
EBITDA
APAT
Diluted EPS (Rs)
P/E (x)
EV / EBITDA (x)
RoE (%)

1QFY17
4,660
596
308
1.6

1QFY16
4,749
678
458
2.4

YoY (%)
(1.9)
(12.2)
(32.7)
(32.7)

4QFY16
5,324
796
587
3.1

QoQ (%)
(12.5)
(25.2)
(47.5)
(47.5)

FY15*
23,197
4,730
815
4.4
35.8
14.3
6.2

FY16E*
26,145
7,435
1,155
6.2
25.3
9.5
7.2

FY17E*
28,544
7,566
948
5.1
30.8
9.4
5.0

FY18E*
31,704
8,007
1,118
6.0
26.1
9.2
5.7

Source: Company, HDFC sec Inst Research, * Consolidated

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

ASHOKA BUILDCON: RESULTS REVIEW 1QFY17

Standalone Quarterly Financial

ABLs 1QFY17 YoY execution
disappointed as net
revenues de-grew
~1.9/12.5% YoY/QoQ

Revenue miss mainly on

account of ~3.4% YoY
decline in EPC revenues
owing to delays in pick up in
new order execution

EBITDA margins contracted

~150bps YoY to 12.8% on
account of ~293bps
contraction in EPC EBITDA
margins. ABL didnt book
EBIDTA on Rs 400mn of new
order execution owing to
project not achieving profit
threshold

ABLs YTDFY17 order intake

was Rs 20.9bn which
includes Rs 4.9bn EPC and Rs
16bn HAM orders

Particulars (Rs mn)

Net Sales
Material Expenses
Employee Expenses
Other Operating Expenses
Operating Profits
Other Operating Income
EBITDA
Depreciation
EBIT
Other Income
Interest Cost
PBT
Tax
RPAT
E/o (adj for tax)
APAT

1QFY17
4,660
3,763
198
126
572
24
596
123
472
82
76
478
170
308
308

1QFY16
4,749
3,817
166
90
676
3
678
138
540
231
143
628
170
458
458

YoY (%)
(1.9)
(1.4)
19.9
39.5
(15.3)
809.2
(12.2)
(10.8)
(12.5)
(64.6)
(46.7)
(23.9)
(0.1)
(32.7)
(32.7)

4QFY16
5,324
4,352
202
147
623
173
796
181
616
451
162
905
223
681
95
587

QoQ (%)
(12.5)
(13.5)
(1.6)
(14.4)
(8.2)
(86.3)
(25.2)
(31.7)
(23.3)
(81.9)
(53.0)
(47.2)
(24.1)
(54.8)
(47.5)

1QFY17
80.8
4.3
2.7
12.3
0.5
12.8
35.5
6.6

1QFY16
80.4
3.5
1.9
14.2
0.1
14.3
27.0
9.6

YoY (bps)
38
77
80
(195)
46
(150)
846
(303)

4QFY16
81.7
3.8
2.8
11.7
3.3
15.0
24.7
11.0

QoQ (bps)
(98)
47
(6)
57
(274)
(217)
1,079
(441)

Source: Company, HDFC sec Inst Research

Margin Analysis
Material Expenses % Net Sales
Employee Expenses % Net Sales
Other Operating Expenses % Net Sales
Operating Margins (%)
Other Operating Income % Net Sales
EBITDA Margin (%)
Tax Rate (%)
APAT Margin (%)
Source: Company, HDFC sec Inst Research

Standalone/Cons. gross debt

reduced Rs 1,410/1,281mn
QoQ to Rs 2.6/39.7bn
Page | 2

ASHOKA BUILDCON: RESULTS REVIEW 1QFY17

Order Book Assumptions

ABLs YTDFY17 order book
stood at Rs 57.7bn with new
order wins of Rs 20.9bn. ABL
has guided for Rs 45bn order
inflows in FY17E

Rs mn
Opening Order Book
Add: New Order Wins
Less: Orders Executed
Closing Order Book
Order Book/Sales (x)

We have assumed Rs
35/39bn of new order inflow
during FY17/18E

Source: Company, HDFC sec Inst Research

Roads - BOT
100%

Roads - EPC

Roads - HAM

YTDFY17
41,106
20860
4,312
57,654
3.0

FY16
32,126
28,219
19,239
41,106
2.1

FY17E
41,106
35,274
21,548
54,832
2.5

FY18E
54,832
39,507
24,806
69,533
2.8

Captive BOT reducing , EPC and HAM increasing

Roads - BOT

Power T&D

Roads - EPC

Roads - HAM

Source: Company, HDFC sec Inst Research

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

Captive road BOT order book

has been reducing while
third-party NHAI EPC and
HAM contracts (assuming
securitization post
completion) are increasing
in order share.

Order book skewed towards roads EPC and HAM

1QFY14

Roads segments (EBIDTA

margins of 11-12%) order
book has been increasing vs.
the T&D order book (EBIDTA
margins of 9-10%)

FY15
36,099
13,826
18,869
31,056
1.6

Source: Company, HDFC sec Inst Research

High share of Third party

EPC will help reduce margin
volatility as ABL may get
commodities price variations
whilst BOT project are
generally fixed price and
margin dilutive during
commodity upcycle
Page | 3

ASHOKA BUILDCON: RESULTS REVIEW 1QFY17

EPC-Order Book To Multiply 1.7x Over FY16-18E

Order Book (Rs bn)
Order book/sales (x) - RHS

10.0

5.0

8.0

45

4.0

6.0

30

3.0

4.0

15

2.0

2.0

1.0

80.0
70.0
60.0
50.0
30.0
20.0
10.0

FY18E

FY17E

FY16

FY15

FY14

FY13

FY12

FY11

FY18E

FY17E

FY16

FY15

FY14

FY13

FY12

FY11

40.0

Source: Company, HDFC sec Inst Research

Source: Company, HDFC sec Inst Research

Consolidated Net D/E Ratio To Remain At 2x

ABL to generate FCFE of ~Rs 2bn in FY18E

Net Debt (Rs bn)

Cons.EBITDA (Rs bn)

Cons. Cash flow from operations (Rs bn)
Cons. FCF (Rs bn) - RHS

Net D/E Ratio (x) - RHS

50

3.0

40

2.5

10.0

2.0

8.0

1.5

6.0

1.0

4.0

(2.0)

10

0.5

2.0

Source: Company, HDFC sec Inst Research

4.0
2.0

(4.0)
(6.0)

FY18E

(8.0)

FY17E

FY16

FY18E

FY17E

FY16

FY15

FY14

20

6.0

FY15

30

FY13

Strong FCFE to result in

stable gross consolidated
debt. Incremental borrowing
only for BOT projects
funding

60

FY12

BOT revenue may de-grow

during FY18-19E as ABLs toll
projects are expiring in
FY18E. This may result in toll
revenue contraction by Rs
1.8bn, largely contributed by
Indore, Wainganga and
Aurangabad projects

BOT EBITDA (Rs bn)

% BOT EBITDA Contribution

6.0

FY11

Order book growth to mirror

ordering in roads and T&D
segments

EPC EBITDA (Rs bn)

EPC Revenues (Rs bn)

75

FY16-18E order inflow CAGR

of 18.3% will largely be
driven by third-party NHAI
road EPC projects

% BOT EBIDTA To Reduce by ~207bps By FY18E

FY14

We expect ABL order book

to multiply 1.7x over FY1618E

Source: Company, HDFC sec Inst Research

Consolidated Net D/E to

remain in ~2-2.3x band
Page | 4

ASHOKA BUILDCON: RESULTS REVIEW 1QFY17

ABLs 1QFY17 BOT toll

collections grew ~8.4% YoY
to Rs 2.4bn
Dhankuni, Bhandara and
Sambalpur toll collection
grew ~7-16% YoY

Total pending equity

requirement is Rs 2.6bn for
the two new annuity
projects and one HAM
project

Jaora Nayagaon contributes

~58% to our BOT valuation
and the shift of traffic to
competing road on NH3
remains a key overhang

We have valued ABLs 61%

stake in ACL projects at Rs
40.5/sh and the direct BOTs
at Rs 35.4/sh. The total
asset portfolio is valued at
Rs 75.9/sh

Toll revenue growth picking pace Value BOTs at Rs 76/sh

ABLs 1QFY17 BOT toll collections grew ~8.4% YoY

to Rs 2.4bn on the back of healthy traction in ACL

projects (grew ~9.4% YoY). ABL projects toll
collection grew ~6.2% YoY.

Dhankuni, Bhandara, Sambalpur and Jaora toll

collection grew ~7-16% YoY, while Belgaum
reported growth of ~4.3% YoY. ABL attributed
growth to sustained pickup in economic activity
though mining pickup yet to fully reflect.

Sambalpur project: The toll collection post full

COD has improved to Rs 1.6mn/day (Rs 1.4mn/day
in 1QFY17). Mining recovery will add another Rs
0.4mn/day and plugging of leakages will add Rs
0.15mn/day incrementally. These additions will
result in toll revenue of Rs 1.9mn/day, still 25%
lower vs. estimates.

BOT Project Valuation

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

PNG: With local Government not providing

support to plug traffic leakage (50%), PNG

consortium has terminated the project and
handed over toll collection to NHAI on 13th Apr
2016. ABL has written off Rs 1.4bn on account of
equity investment and provided Rs 570mn
additional provision during 4QFY16. The
consortium has claimed compensation from NHAI
amounting to Rs 17.5bn including debt (equity
portion will be Rs 5.5bn, ABL share Rs 1.4bn). Final
award awaited from NHAI.

Balance Equity Requirement: Rs 550mn in two

annuity projects and Rs 2bn for the HAM project.
During FY17E, ABL will spend Rs 900mn and
balance Rs 1,700mn during FY18E.

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

Value for ABL Per share value

(Rs mn)
(Rs/sh)
1,266
6.8
(602)
(3.2)
2,547
13.6
409
2.2
184
1.0
3,219
17.2
552
2.9
7,575
40.5
242
1.3
120
0.6
851
4.5
353
1.9
5,063
27.1
6,630
35.4
14,205
75.9

Source: Company, HDFC sec Inst Research

Page | 5

ASHOKA BUILDCON: RESULTS REVIEW 1QFY17

Key Assumptions And Estimates - Standalone

We expect ABL order book
to multiply 1.7x over FY1618E
FY16-18E order inflow CAGR
of 18.3% will largely be
driven by Hybrid Anuity +
third-party NHAI road EPC
projects in equal proportion
FY16-18E EPC revenue CAGR
of 13.5%

EPC EBIDTA margins to

contract as share of NHAI
EPC revenue increases in the
mix. These orders have 1112% margins vs. 12-13% for
the captive orders

We have stripped off the

dividend received from
subsidiary on account of the
real estate monetization.
Hence other income is lower
by ~Rs 350mn/annum vs
reported. We have adjusted
other income to recurring
level

Key Assumptions
(Rs mn)
Order-book (INR mn)
Opening Order Book

FY16

FY17E

FY18E

36,099

32,126

41,106

54,832

32.4

33.4

26.8 30% FY16-18E CAGR

2.0
1.0

12.0
4.5

11.5

(12.2)

(86.8)

576
474

646
454

17.6
(10.9)

15.0
(6.4)

152

175

205

(9.5)

15.3

1,644
8.7
602

1,640
8.5
535

1,733
8.0
520

1,958
7.9
568

(0.2)
(18.8)

5.7
(48.3)

36.6

32.6

30.0

29.0

(401.1)
bps

1,042

1,105

1,213

1,390

6.1

5.5

5.7

5.6

5.6

22.3

35,274

39,507

Less: Orders Executed

Closing Order Book
Trailing Order/Sales (x)
Revenue
EBIDTA EPC

18,869
31,056
1.6
18,869
2,470

19,239
41,106
2.1
19,239
2,495

21,548
54,832
2.5
21,548
2,607

24,806
69,533
2.8
24,806
2,853

EBIDTA margins EPC (%)

13.1

13.0

12.1

Depreciation
Financial Charges

426
568

501
506

Other income

168

PAT margin (%)

Source: HDFC sec Inst Research

Comments

25.0

28,219

Tax rate (%)

FY18E

104.1

13,826

PBT
PBT margin (%)
Tax

Growth%
FY16
FY17E

Strong growth on account of high

bidding in roads segment. ABL has
12.0 highlighted that it will increase
bidding exposure to cover 50%+
bids vs 30%+ during FY16

Add: New Order Wins

PAT

12.2% FY16-18E Profit CAGR

FY15

15.1 13.5% FY16-18E EPC revenue CAGR

9.4 6.9% FY16-18E EPC EBIDTA CAGR
EBIDTA margins contract on
account of NHAI EPC projects
(60.0)
having 11-12% margins vs 12-13%
for captive order book
12.1
(4.1) Stable interest costs
We have removed the impact of
dividend stepped up from
monetization of real estate ~ Rs
~350mn average/annum. Quarterly
17.2 presentation carries the impact of
real estate monetization /
investment income in EPC revenue
and profits. We have arrived at
adjusted recurring other income.
13.0 9.2% FY16-18E PBT CAGR
(14.9)

Decline in line with Union budget

(260.7)
(100) bps direction on reducing corporate
bps
taxes
9.7
14.6 12.2% FY16-18E Profit CAGR
(11.6)

(2.5)

Page | 6

ASHOKA BUILDCON: RESULTS REVIEW 1QFY17

We expect ABL to deliver

10.1% FY16-18E revenue
CAGR. This will largely be
driven by EPC revenue CAGR
of 13.5%

EPC EBIDTA margins to

contract as share of NHAI
EPC revenue increases in the
mix. These orders have 1112% margins vs. 12-13% for
the captive orders

With ABLs high margins

(85%) BOT projects nearing
end of concession, FY18E
EBIDTA margins will
contract

FY16 EBIDTA includes 6070% EBIDTA margins from

Rs 400-500mn real estate.
ABL has Rs 2.8bn worth of
real estate on its books (at
historical cost)

High tax rate as ABL pays

tax on profit-making BOTs
at MAT and full tax on EPC

Key Assumptions And Estimates - Consolidated

Key Assumptions (Rs mn)

Toll revenue

EPC revenue
Total Revenue

FY15

4,328

FY16

6,906

FY17E

6,997

FY18E

Growth%
FY16E
FY17E

FY18E

6,898

59.6

1.3

(1.4)

18,869 19,239 21,548 24,806

23,197 26,145 28,544 31,704

2.0
12.7

12.0
9.2

15.1
11.1

EBIDTA Toll

2,260

5,227

4,958

5,155

131.3

(5.1)

4.0

EBIDTA EPC

2,470

2,495

2,607

2,853

1.0

4.5

9.4

Total EBIDTA

4,730

7,722

7,565

8,007

63.2

(2.0)

5.8

EBIDTA margins toll (%)

52.2

75.7

70.9

74.7

2,346.5

(481.8)

386.5

EBIDTA margins EPC (%)

13.1

13.0

12.1

11.5

(12.2)

(86.8)

(60.0)

EBIDTA Margins (%)

20.4

29.5

26.5

25.3

914.3

(303.0)

(124.7)

1,517

2,491

2,447

2,793

64.2

(1.8)

14.2

Depreciation
Financial Charges

2,721

4,478

5,134

4,948

64.6

14.6

Other income
PBT

290
782

(49)
703

573
558

584
851

(10.1)

(20.6)

PBT margin (%)

3.4

2.7

2.0

2.7

(68.3)

(73.3)

Tax

796

973

911

847

22.3

(6.4)

101.7

138.5

163.1

99.5

Tax rate (%)

Comments
Muted growth in toll revenues during FY17-18E
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
13.5% FY16-18E EPC revenue CAGR
10.1% FY16-18E revenue CAGR
Muted FY16-18E EBIDTA CAGR as all toll
projects start contributing to revenues. Toll
EBIDTA de-growth in FY18E as ABLs highmargin direct projects near end
6.9% FY16-18E EPC EBIDTA CAGR as EBIDTA
margins contract on account of NHAI EPC
projects having 11-12% margins vs. 12-13% for
captive order book
1.8% FY16-18E 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 FY17-18E as
ABL direct toll project will end & EPC margins
will compress as NHAI EPC projects share
increase in revenue.

Borrowing cost reduction in FY18E as EPC

projects won by ABL are interest-free , besides
(3.6)
BOT projects may get refinanced at lower
interest rates
Dividend on cash and deposits
52.4 FY16-18E PBT CAGR of 10.0%
PBT margin contraction in line with EBIDTA
72.8 contraction. FY18E benefited by lower financing
cost
(7.0)
Tax rate to remain high as MAT is incurred on
profitable BOT projects, while losses offset
standalone profits
Page | 7

ASHOKA BUILDCON: RESULTS REVIEW 1QFY17

Losses from the BOT projects

nullify impact of standalone
profits. This results in muted
PAT
Loss share of minority and
profits from associates
results in muted FY16-18E
PAT CAGR

Change in cash position

doesnt impact debt position
materially

During FY16 EPC order

inflows stood at Rs 28.2bn
vs our estimate of Rs 35bn

Key Assumptions (Rs mn)

PAT
Profit/(Loss) Minority
Share of Profit/loss Asso.

FY15

FY16

FY17E

FY18E

FY16E

(13)

(270)

(352)

(828)

(995)

(902)

(677)

430

399

438

Net Profit
Gross Block Turnover
Debtor days
CFO - a
CFI - b

815 1,155
948 1,119
0.3
0.2
0.2
0.2
39
51
47
45
3,898 4,270 3,874 5,082
(8,122) (4,036) (2,452) (2,543)

FCF - a+b

(4,224)

CFF - c

3,694

Total change in cash (530)

a+b+c
Source: HDFC sec Inst Research

235

1,421

2,539

2,556 (2,571) (2,386)

2,791 (1,150)

153

41.7
(26.7)
30.9

Growth%
FY17E

(17.9)
8.5
(7.1)

FY18E

Comments

Minority losses on account of initial years

losses in BOT projects
Profits from Wainganga and Jaora. Loss making
PNG project has been terminated and hence
profits from associate has improved
18.0 Muted FY16-18E PAT CAGR
11.9
(4.3)

Strong free cashflow generation as growth

picks up
Surplus cashflow utilised to repay debt service
interest
Net change in cash doesnt impact debt
position materially

Page | 8

ASHOKA BUILDCON: RESULTS REVIEW 1QFY17

We value ABLs BOT

portfolio at Rs 76/share
(1.1x invested equity)
We value standalone EPC
business at Rs 111/share
(15x one-year forward
FY18E EPS)
Real Estate land holding at
Rs 15/share (1x P/BV)

Outlook And Valuation

Target Price of Rs 202/sh implies ~29.5% upside

We have valued ABL standalone on P/E basis at a

in-line with peers, namely KNR/J Kumar/Sadbhav,

at 15x one-year forward. Our rationale behind this
is (1) Stable order book with ~1.7x increase over
the FY16-18E period to Rs 69.5bn, (2) Improving
balance sheet (FY18E standalone net D/E will
improve to 0.1x from 0.21x end FY16), and (3)
Limited equity support requirement from ACL.
Further, with the reduction in share of T&D
revenue in the mix, the working capital cycle may
improve, leaving scope for further standalone
debt reduction.

Despite having lower margins vs KNR/J Kumar we

Our target P/E multiple is in
line with peers, such as KNR
Construction, Sadbhav and J
Kumar Infra

have valued ABL at 15x (in line with peers) on

account of (1) Diversified presence in roads and
T&D segments, the biggest beneficiary of
government spendings (2) Strong execution
capability, and (3) Likely support from captive
order book in lieu of any contraction in future
roads EPC orders. The government-led spends in

the infrastructure sector will continue to drive

stock performance and ABL, with its strong
credentials, will likely benefit from the pick-up in
ordering activity. The company, over the past
many years, has built strong pre-qualification in
potentially large ordering segments such as roads
and T&D
We have valued toll business separately under
Ashoka Concessions and ABLs direct projects. We
have used 14% discount rate for arriving at NPV of
the projects. Our estimates for Sambalpur/
Dhankuni/Belgaum are lower vs. consensus. We
value the BOT business at Rs 76/sh (1.1x of ABL
invested equity).
We maintain BUY on ABL with TP of Rs
202/share. We value the (1) Standalone EPC
business at Rs 111/share (15x one-year forward
FY18 EPS) and (2) ABL BOT projects at Rs
76/share (3) land at historical costs at Rs
15/share.

SOTP Valuation
Segment

We maintain BUY with

SOTP-based target price of
Rs 202/sh.

Ashoka Concessions Ltd. @ 61%

stake
ABL direct Projects
TOTAL BOT Value
Standalone construction - EPC
Land
SOTP Value

Project
Value (Rs mn)

Value for ABL (Rs

mn)
@ 61% stake

22,964

7,575

15,887
38,851

6,611
14,186
20,853
2,782
37,821

Per share value

(Rs/sh) @ 61%
stake

Comments

40 DCF using 14% WACC

35 DCF using 14% WACC
76
111 Standalone 15x FY18E EPS
15 1x P/BV
202

Source: HDFC sec Inst Research

Page | 9

ASHOKA BUILDCON: RESULTS REVIEW 1QFY17

Income Statement (Consolidated)

Year ending March (Rs mn)
Net Revenues
Growth (%)
Material Expenses
Employee Expenses
Other Operating Expenses
EBIDTA
EBIDTA Margin (%)
EBIDTA Growth (%)
Depreciation
EBIT
Other Income (Incl EO items)
Interest
PBT
Tax
RPAT
Minority Interest/Share of
associates
Share of (Loss) / Profit from
Asso.(Net Of Tax)
EO Items
APAT
APAT Growth (%)
Adjusted EPS (Rs/sh)
EPS Growth (%)
Source: Company, HDFC sec Inst Research

Balance Sheet (Consolidated)

FY14
17,949
(3.1)
12,988
583
556
3,822
21.3
2.8
1,389
2,432
140
1,335
1,237
688
549

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
28,544
9.2
19,300
1,017
662
7,566
26.5
(6.8)
2,447
5,119
573
5,134
558
911
(352)

FY18E
31,704
11.1
21,909
1,119
669
8,007
25.3
(4.7)
2,793
5,214
584
4,948
850
847
3

(425)

(828)

(995)

(902)

(677)

399

438

157
1,131
13.3
6.0
13.3

815
(28.0)
4.4
(28.0)

570
1,155
41.7
6.2
41.7

948
(17.9)
5.1
(17.9)

1,118
17.9
6.0
17.9

Year ending March (Rs mn)

SOURCES OF FUNDS
Share Capital
Reserves
Total Shareholders Funds
Minority Interest
Long-term Debt
Short-term Debt
Total Debt
Net Deferred Taxes
TOTAL SOURCES OF FUNDS
APPLICATION OF FUNDS
Net Block
CWIP/Intangible assets under
development
Investments
Total Non-current Assets
Inventories
Debtors
Cash & Equivalents
Other Current Assets
Total Current Assets
Creditors
Other Current Liabilities & Provns
Total Current Liabilities
Net Current Assets
TOTAL APPLICATION OF FUNDS

FY14

FY15

FY16

FY17E

FY18E

790
11,839
12,628
4,645
29,621
2,305
31,926
(21)
49,179

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
18,262
19,198
4,094
42,885
2,892
45,777
(221)
68,847

936
18,943
19,878
3,417
45,885
2,892
48,777
(221)
71,851

40,250 125,712 129,286 126,385 126,592

79,621

1,505

3,437

3,521

2,847
2,345
3,377
3,377
3,377
122,718 129,562 132,663 133,198 133,489
6,272
7,286 10,890
9,365 10,316
1,305
3,644
3,660
3,746
4,127
945
410
1,679
4,016
4,219
3,921
5,607
4,791
7,011
7,918
12,443 16,947 21,020 24,137 26,580
5,701
6,332
4,054
7,492
8,253
80,281 82,934 83,390 80,996 79,965
85,982 89,265 87,445 88,488 88,219
(73,539) (72,319) (66,425) (64,351) (61,638)
49,179 57,244 66,238 68,847 71,851

Source: Company, HDFC sec Inst Research

Page | 10

ASHOKA BUILDCON: RESULTS REVIEW 1QFY17

Cash Flow (Consolidated)

Year ending March (Rs mn)
Reported PBT
Non-operating & EO items
Interest expenses
Depreciation
Working Capital Change
Tax Paid
OPERATING CASH FLOW ( a )
Capex
Free cash flow (FCF)
Investments
INVESTING CASH FLOW ( b )
Share capital Issuance
Debt Issuance
Interest expenses
Dividend
FINANCING CASH FLOW ( c )
NET CASH FLOW (a+b+c)
Closing Cash & Equivalents

Key Ratios (Consolidated)

FY14
1,394
479
1,335
1,389
(38)
(702)
3,858
(10,802)
(6,944)
1,580
(9,223)
7,391
(1,335)
(266)
5,790
425
943

Source: Company, HDFC sec Inst Research

FY15
782
1,069
2,721
1,517
(1,317)
(874)
3,898
(8,872)
(4,973)
749
(8,122)
(106)
6,811
(2,721)
(290)
3,694
(530)
415

FY16E
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
558
(174)
5,134
2,447
263
(911)
7,317
(2,982)
4,335
573
(2,409)
3,000
(5,134)
(438)
(2,571)
2,337
4,016

FY18E
850
(146)
4,948
2,793
(2,509)
(847)
5,089
(3,084)
2,005
584
(2,500)
3,000
(4,948)
(438)
(2,386)
204
4,219

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 (%)

FY14

FY15

FY16E

FY17E

FY18E

27.6
21.3
13.6
6.3
9.8
2.7
4.0

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)

32.4
26.5
17.9
3.3
5.0
(5.3)
(3.4)

30.9
25.3
16.4
3.5
5.7
0.0
1.6

55.6
0.4
119
22
77
110
1,644
108
8.4
2.5
1.8

101.7
0.2
107
39
75
95
1,284
126
8.2
2.8
1.2

172.9
0.2
127
51
73
72
1,161
178
5.8
2.2
1.1

163.1
0.2
129
47
75
74
1,051
178
6.1
2.2
1.0

99.6
0.2
113
45
86
91
927
154
6.1
2.2
1.1

6.0
13.5
1.5
67.5

4.4
12.5
1.5
72.5

6.2
19.5
1.8
99.9

5.1
18.1
2.0
102.6

6.0
20.9
2.0
106.2

25.8
2.3
15.7
3.4
0.1
(11.5)
(3.0)
1.0

35.8
2.2
14.3
2.9
0.1
(7.4)
(3.0)
1.0

25.3
1.6
9.5
2.7
0.1
1.1
(8.4)
1.1

30.8
1.5
9.4
2.5
0.1
6.1
7.5
1.3

26.1
1.5
9.2
2.3
0.1
2.7
0.2
1.3

Source: Company, HDFC sec Inst Research

Page | 11

ASHOKA BUILDCON: RESULTS REVIEW 1QFY17

RECOMMENDATION HISTORY
Ashoka Buildcon

Date
3-Feb-16
23-May-16
30-Aug-16

TP

Aug-16

Jul-16

Jun-16

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

240
220
200
180
160
140
120
100

CMP
184
136
156

Reco
BUY
BUY
BUY

Target
215
202
202

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

ASHOKA BUILDCON: RESULTS REVIEW 1QFY17

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Page | 13