17 Nov , 2021 By : Kanchan Joshi
Ashoka Buildcon Ltd's Q2 performance was subdued, hit by slower execution amid monsoon. Toll collections, however, grew 17% sequentially, with rising vehicular traffic post easing of lockdown restrictions.
The stock saw gains of up to 3.5% in morning trades on Wednesday.
The company’s total income from operations at Rs917 crore, grew 5% year-on-year in 2QFY22, but fell 9% on a sequential basis. The growth, however, missed expectations, and net sales were 8 percent below the estimate of Motilal Oswal Financial Services Ltd.
Ebitda margin too declined to 16.9% from 19.5% in the year-ago quarter. With the Ebitda down 9% year-on-year and 1.5% sequentially, net profit was down 8.7% year-on-year and 5.7% sequentially.
While the quarter saw soft performance due to delays in commencing various projects, the management has revised the revenue growth guidance for FY22 to 20% from 25% provided earlier.
Analysts at Motilal Oswal Financial Services said that “Ashoka Buildcon has delivered strong execution over the last couple of years, with decent profitability. However, the pending exit of the private equity investor in its asset portfolio is an overhang on the stock. Faster closures hold the key for a stock re-rating."
The company on the other hand has a very strong order book. It has received about Rs3354 crore worth of order inflow until now in FY22. Ashoka Buildcon's EPC (engineering, procurement and construction) order backlog stands at Rs11880 crore, which is three times FY21 revenues. Road projects contributed about Rs7268 crore to the order book while HAM (hybrid-annuity model) and EPC projects contributed about Rs2813 crore and Rs4455 crore respectively. While Buildings EPC and power transmission and distribution contributed about Rs1900 crore each to order book, railways order book stood at about Rs800 crore.
Analysts say that the company is striving to increase contribution to order book from segments other than roads & railways to 30% from the current 22%, with a focus on EPC projects.
Analysts at PhillipCapital India Research said, “We continue to like the stock and view Ashoka a perfect proxy to play the road segment, with proven execution capabilities and healthy portfolio mix of EPC-BOT-HAM projects". Its strategy to diversify into the buildings segment also augurs well for the company, as it grows, they added.
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