INSUBCONTINENT EXCLUSIVE:
One key variable analysts have been tracking at infrastructure firms that are also into construction is the pace of execution of the order
the September quarter has positively surprised the Street
After a weak June quarter, the pace of execution of the order book, now close to Rs 9,764 crore, has picked up considerably.
Revenues more
than doubled on year to Rs 764.4 crore in the September quarter, which boosted its operating profit or earnings before interest, tax,
depreciation and amortisation (EBITDA) and net profit
EBIDTA and net profit grew by 105 per cent and 90 per cent, respectively, to Rs 103 crore and Rs 62.3 crore.
In the transmission and
distribution business too, the pace of execution of construction orders showed visible improvement, with revenue rising to Rs 340 crore in
the quarter under review, from Rs 54 crore in the same quarter last year
Another factor that has enthused analysts is the financial closure of all Hybrid-Annuity projects (HAM)
In HAM projects, the government pays 40 per cent of the construction costs, while the company must arrange the rest.
With an order book
On the roads portfolio, it raised tariffs in September, which helped enhance toll revenues by 9.2 per cent to Rs 250 crore
This pace in the execution of the order book is expected to continue in the coming quarters, generating healthy cash flows that would be
enough to meet incremental equity commitments of Rs 646.9 crore.
Due to strong visibility of sales from HAM projects and other construction
assignments, the management expects revenues to grow in the range of 35-40 per cent in FY19.
This is achievable, given the improved pace of
its execution and not-so-stretched balance sheet (debt to equity ratio of 3).
The stock has gained 11 per cent in the past five trading
sessions to Rs 122.Considering FY20 financials, Ashoka Buildcon is trading at an EV/EBIDTA of 4.2, compared with the industry average of
