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RESULTS REVIEW 4QFY19 25 MAY 2019

Ashoka Buildcon BUY

Strong growth anticipatedWe maintain BUY on ABL with a SOTP of Rs 261/sh. We value the EPC business at 15x FY21E EPS (similar to Sadbhav Eng. and vs. 18x to KNR and PNC).

HIGHLIGHTS OF THE QUARTER: Strong outperformance: ABL delivered

Rev/EBIDTA/APAT beat of 27/37/40%. FY19 order inflow/order backlog stood at Rs 63.5/83.9bn ex Rs 12.6bn L1. ABL aims new wins of Rs 40bn in roads, ~Rs 15/10bn in railways and power during FY20E.

On track to post 25% YoY rev growth (standalone) in FY20E: With the order book at Rs 96.6bn (incl. L1, 2.5x FY19 book to bill), we expect 21.4% revenue CAGR over FY19-21E. ABL has guided for a base case 25-30% growth (incl Rs 35-40bn execution in road projects alone). Excluding one-offs, ABL has guided for core EBITDA margins in the range of 11-12.5%.

All HAM projects to start by Jul-19: Of the 5 new HAMs (ex. L1), Rs 3.6/0.4bn revenue was booked during FY19 in Ankleshwar/Khairatunda. The remaining three have >95% land (3G) and ADs are expected by Jul 19. ~Rs 3.1/1.5bn equity outgo is to be incurred on HAM projects during FY20/21E (+Rs 0.5bn annually for CGD).

ACL monetization targeted by FY20E end: The earlier Mar-19 deadline for SBI Macquarie exit has now been extended by two years. ABL is exploring options like asset swap or stake sale post deal closure. Other options like an InVIT structure is also under consideration. These deals could coincide with SBI Macquarie’s exit.

Arbitration claims nearing realization: With ~Rs 6.9bn arbitration award received in FY19, total o/s favorable arbitration claims stand at ~Rs 14bn. ABL will first push for out of court settlement with NHAI and other state bodies (failing which it will resort to other innovative solutions). ABL is aiming at part realizing some claims in FY20E.

STANCE: ABL is well placed to capitalize on the upcoming infra opportunities with a strong balance sheet (0.3x FY19 net D/E). Speedy BOT asset monetization (incl. Macquarie’s exit) would allow ABL the flexibility to bid for more HAM/ BOT projects, without increasing leverage (~ABL has guided for peak standalone debt of Rs 7-8bn, current debt is Rs 7.2bn). We maintain BUY. Key risks (1) Delay in SBI Macquarie deal closure; (2) Slow traffic recovery; (3) High interest rate; and (4) Delay in ADs.

Financial Summary (Standalone) (Rs mn) 4QYF19 4QYF18 YoY (%) 3QFY19 QoQ (%) FY18* FY19P* FY20E* FY21E* Net Sales 13,074 7,023 86.2 10,651 22.7 36,030 49,301 58,058 67,726 EBITDA 1,814 807 124.7 1,487 22.0 11,396 13,943 15,761 16,347 APAT 1,051 470 123.7 1,019 3.1 (1,111) 267 995 913 Diluted EPS (Rs) 3.7 1.7 123.7 3.6 3.1 (5.9) 1.0 3.5 3.3 P/E (x) (21.6) 134.7 36.1 39.4 EV / EBITDA (x) 7.1 6.4 5.9 5.8 RoE (%) (6.7) 1.5 5.9 5.6 Source: Company, HDFC sec Inst Research, *Consolidated

INDUSTRY INFRASTRUCTURE CMP (as on 24 May 2019) Rs 128 Target Price Rs 261 Nifty 11,844 Sensex 39,435 KEY STOCK DATA Bloomberg ASBL IN No. of Shares (mn) 281 MCap (Rs bn) / ($ mn) 36/517 6m avg traded value (Rs mn) 38 STOCK PERFORMANCE (%) 52 Week high / low Rs 189/93 3M 6M 12M Absolute (%) 3.6 1.9 (25.0) Relative (%) (6.3) (10.8) (38.7) SHAREHOLDING PATTERN (%) Dec-18 Mar-19 Promoters 54.26 54.26 FIs & Local MFs 31.47 31.63 FPIs 4.25 4.03 Public & Others 10.02 10.08 Pledged Shares - - Source : BSE

Parikshit D Kandpal, CFA parikshitd.kandpal@hdfcsec.com +91-22-6171-7317

Kunal Bhandari, ACA kunal.bhandari@hdfcsec.com +91-22-6639-3035

ASHOKA BUILDCON : RESULT REVIEW 4QFY19

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Standalone Quarterly Financial Particulars (Rs mn) 4QYF19 4QYF18 YoY (%) 3QFY19 QoQ (%) FY19 FY18 YoY (%) Net Sales 13,074 7,023 86.2 10,651 22.7 38,094 24,482 55.6 Material Expenses 10,525 5,731 83.7 8,305 26.7 30,300 19,545 55.0 Employee Expenses 412 279 47.7 430 (4.2) 1,491 1,067 39.7 Other Operating Expenses 323 206 56.8 429 (24.7) 1,265 936 35.1 EBITDA 1,814 807 124.7 1,487 22.0 5,039 2,934 71.7 Depreciation 260 144 80.6 202 28.7 764 531 43.8 EBIT 1,554 663 134.3 1,285 20.9 4,275 2,403 77.9 Other Income (incl. EO) 307 612 (49.8) (144) (313.2) 798 978 (18.4) Interest Cost 367 113 224.8 239 53.6 907 486 86.6 PBT 1,494 1,162 28.5 902 65.6 4,165 2,895 43.9 Tax 516 109 375.3 281 83.6 1,307 524 149.3 RPAT 978 1,053 (7.2) 621 57.4 2,858 2,370 20.6 EO Items 73 (583) 398 - 359 (583) - APAT 1,051 470 123.3 1,019 3.1 3,217 1,787 80.0 Source: Company, HDFC sec Inst Research

Margin Analysis MARGIN ANALYSIS 4QYF19 4QYF18 YoY (bps) 3QFY19 QoQ (bps) FY19 FY18 YoY (bps) Material Expenses % Net Sales 80.5 81.6 (110) 78.0 253 79.5 79.8 (29) Employee Expenses % Net Sales 3.2 4.0 (82) 4.0 (89) 3.9 4.4 (45) Other Ope Expenses % Net Sales 2.5 2.9 (46) 4.0 (156) 3.3 3.8 (50) EBITDA Margin (%) 13.9 11.5 238 14.0 (9) 13.2 12.0 124 Tax Rate (%) 34.5 9.3 2,520 31.2 339 31.4 18.1 1,327 APAT Margin (%) 8.0 6.7 134 9.6 (153) 8.4 7.3 114 Source: Company, HDFC sec Inst Research Order Book Assumptions Rs mn FY16 FY17 FY18 FY19 FY20E FY21E Opening Order Book 32,126 41,106 70,047 58,487 83,940 112,579 Add: New Order Wins 28,219 39,255 12,923 63,547* 76,256 80,451 Less: Orders Executed 19,239 20,133 24,483 38,094 47,618 56,189 Closing Order Book 41,106 70,047 58,487 83,940* 112,579 136,841 Order Book/Sales (x) 2.1 3.5 2.4 2.2 2.4 2.4 Source: Company, HDFC sec Inst Research; *excludes Rs 12.6bn L1 from RVNL (Punjab) and Tumkur (IV) HAM

Standalone Revenue: Rs 13.1bn (+86/23% YoY/QoQ, 27% beat) EBITDA margins: 13.9% (+238bps YoY, -9bps QoQ, +100bps beat) Interest increased to Rs 367mn (+225/54% YoY/QoQ) APAT: Rs 1.1bn ( 40% beat). Additional provision of Rs 73mn booked against GVR in 4QFY19 in addition to the Rs 398mn already booked in 3QFY19

ASHOKA BUILDCON : RESULT REVIEW 4QFY19

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FY19 order book of Rs 83.9bn excludes Rs 12.6bn L1 from RVNL (Punjab) and Tumkur (IV) HAM As HAM model gains popularity, its share in order book is gradually increasing. ABL claims to have 100bps higher margins in captive BOT margins and with increasing share of HAM, EBIDTA margins may remain around 12.6-12.8% over FY20-21E

Order Book Skewed Towards Roads – EPC and HAM Within Roads – HAM Captive Increasing

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

0%

20%

40%

60%

80%

100%

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

Roads - BOT Roads - EPC Roads - HAMPower T&D Railways CGD

0%

20%

40%

60%

80%

100%

4QFY

16

1QFY

17

2QFY

17

3QFY

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4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

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2QFY

19

3QFY

19

4QFY

19

Roads - BOT Roads - EPC Roads - HAM

ASHOKA BUILDCON : RESULT REVIEW 4QFY19

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We expect ABL order book to multiply 1.6x over FY19-21E FY19 order book of Rs 83.9bn excludes Rs 12.6bn L1 from RVNL (Punjab) and Tumkur (IV) HAM % BOT EBIDTA to be 81% by FY21E Order book growth to mirror ordering in roads, railways and T&D segments FY19 Consolidated Debt is Rs 56.8bn Consolidated Net D/E to increase to ~3.6x by FY21E

EPC-Order Book To Multiply 1.6x Over FY19-21E % BOT EBIDTA To Reduce To 81% By FY21E

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research Consolidated Net D/E Ratio To Increase to3.6x ABL To generate FCF Of ~Rs 7.4bn In FY21E

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

-

20.0

40.0

60.0

80.0

100.0

120.0

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

E

FY21

E

BOT Revenues (Rs bn) EBITDA margins (%) - RHS

1.0

2.0

3.0

4.0

5.0

6.0

-15 30 45 60 75 90

105 120 135 150

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

E

FY21

E

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

2.3 2.5 2.8

2.6 2.8 2.7

3.0

3.5 3.6

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-

10

20

30

40

50

60

70

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

E

FY21

E

Net Debt (Rs bn) Net D/E Ratio (x) - RHS

(6.0)

(4.0)

(2.0)

-

2.0

4.0

6.0

8.0

10.0

-

5.0

10.0

15.0

20.0

FY15

FY16

FY17

FY18

FY19

FY20

E

FY21

E

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

ASHOKA BUILDCON : RESULT REVIEW 4QFY19

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Revenue Growth Picking Pace – Value BOTs At Rs 51/Sh Completed assets owned directly under ABL are

majorly debt free at the project level and generate ~Rs 200mn annual cash surplus currently. Under-completion projects have the potential to contribute ~Rs 200mn more (growing at 20% annually from there on).

In the ACL portfolio, Sambalpur currently has a cash loss of Rs 300mn against a net cash surplus of Rs 600mn in the remaining projects.

Total investment in ACL projects is Rs 22bn (~Rs 8bn done by Macquarie, who is looking at a ~Rs

14.5bn exit at a 12.5% assured IRR). For all purposes, effective stake of Macquarie is now at 39% in ACL. Ashoka is exploring options like (1) asset swap (where depending on the valuations, Macquarie could get full control of some assets), (2) equity conversion and subsequent stake sale, or (3) an InVIT listing.

Balance Equity Requirement: Equity commitment of Rs 5.6bn of which FY20/21E HAM equity outgo is expected to be Rs 3.1/1.5bn. CGD business equity commitment is ~Rs 1bn of which FY20/21E outgo is expected to be Rs 0.5/0.5bn.

BOT Project – Valuation Stake (%) WACC (%) Project Value (Rs mn)

Value for ABL (Rs mn)

Per share value (Rs/sh)

NH-4-Belgaum Dharwad 100 14 2,075 2,075 4.5 NH-6-Sambalpur Baragarh 100 14 (987) (987) (2.1) NH-6-Dhankuni Kharagpur 100 14 4,176 4,176 9.1 NH-6-Durg (Chattisgarh - Maharashtra) 51 14 1,313 670 1.5 NH-6-Bhandara (Maharashtra – Chattisgarh) 51 14 592 302 0.7

SH-31-Jaora Nayagaon 38 14 13,985 5,278 11.5 Chennai ORR 50 14 1,810 905 2.0 Total – Ashoka Concessions @ 61% stake 14 22,964 12,418 27.0 ABL-Ahmednagar-Aurangabad 100 14 242 242 0.9 ABL-Nashirabad 100 14 120 120 0.4 VHPL-Indore – Edalabad 100 14 851 851 3.0 JAIPL-Wainganga 50 14 707 353 1.3 SH-31-Jaora Nayagaon 36 14 13,985 5,063 18.0 Total – ABL Projects 15,906 6,630 23.6 TOTAL BOT Value 38,870 14,205 50.6 Source: Company, HDFC sec Inst Research

Completed assets owned directly under ABL are majorly debt free at the project level and generate ~Rs 200mn annual cash surplus currently Total investment in ACL projects is Rs 22bn (~Rs 8bn done by Macquarie, who is looking at a ~Rs 14.5bn exit at 12.5% assured IRR) We have valued ABL’s 61% stake in ACL projects at Rs 27.0/sh and the direct BOTs at Rs 23.6/sh. The total asset portfolio is valued at Rs 50.6/sh

ASHOKA BUILDCON : RESULT REVIEW 4QFY19

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Key Assumptions And Estimates - Standalone (Rs mn) FY20E FY21E

% Change (YoY) Comments FY20E FY21E

Order Book (Rs mn) Opening Order Book 100,519 112,996 Add: New Order Wins 60,095 63,400 (25.0) 5.5 Less: Orders Executed 47,618 56,189 Closing Order Book 112,996 120,207 12.4 6.4 Trailing Order Book/Sales (x) 2.4 2.1 Revenue 47,618 56,189 25.0 18.0 21.4% FY19-21E revenue CAGR EBIDTA EPC 6,095 7,052 (17.3) (13.6) 18.3% FY19-21E revenue CAGR

EBIDTA margins EPC 12.8 12.6 (42.7) (25.0) EBIDTA margins to remain in 12.6-12.9% range

Depreciation 886 983 16.0 11.0 Financial Charges 1,683 1,739 85.5 3.3 Other income 826 835 (28.6) 1.2 PBT 4,351 5,165 (3.8) 18.7 6.8% FY19-21E PBT CAGR on

account of higher interest cost PBT margin (%) 9.1 9.2 (23.1) 0.6 Tax 1,305 1,601 Tax rate (%) 30.0 31.0 110.4 100.0 PAT 3,046 3,564 (5.3) 17.0 5.3% FY19-21E Profit CAGR PAT margin (%) 6.4 6.3 (204.8) (5.4) Source: HDFC sec Inst Research

We expect ABL’s order book to multiply 1.2x over FY19-21E Order inflow will largely be driven by Hybrid Annuity & NHAI road EPC projects FY19-21E EPC revenue CAGR of 21.4% EPC EBIDTA margins to remain in 12.6-12.9% band Financial charges jump over FY19-21E as ABL working capital demands increases with execution ramp up 5.3% APAT CAGR over FY19-21E as ABL moves to full tax rate and high interest costs impact profitability We have recalibrated our FY21E estimates to factor in improving execution on back of robust order backlog. Consolidated EPS sees a sharp cut on higher interest cost and initial losses in new projects

ASHOKA BUILDCON : RESULT REVIEW 4QFY19

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Key Assumptions And Estimates - Consolidated

Key Assumptions (Rs mn) FY20E

FY21E

% Change (YoY) Comments FY20E FY21E

Toll revenue 10,441 11,538 11.6 10.5 11.1% FY19-21E Toll revenue CAGR EPC revenue 47,618 56,189 25.0 18.0 21.4% FY19-21E EPC revenue CAGR Total Revenue 58,058 67,726 22.4 16.7 19.5% FY19-21E revenue CAGR EBIDTA Toll 9,666 9,295 8.6 (3.8) EBIDTA EPC 6,095 7,052 21.0 15.7 Total EBIDTA 15,761 16,347 13.0 3.7 8.3% FY19-21E EBIDTA CAGR EBIDTA margins toll 92.6 80.6 (262.5) (1,201.6) EBIDTA margins EPC 12.8 12.6 (42.7) (25.0) EBIDTA Margins 27.1 24.1 (223.9) (301.0) Depreciation 3,904 4,277 51.2 9.5

Financial Charges 10,230 9,881 0.2 (3.4)

Borrowing cost includes about Rs 2.7bn of non cash item on account of intangible now being treated at NPV value vs absolute amount earlier. This has resulted in Rs 55bn reduction in NHAI premium deferral. Interest provisioning will accrue to NPV through P&L and is non cash. Earlier it was capitalized and reflected in amortization

Other income 781 790 (43.1) 1.3 Will include annuity projects profitability PBT 2,407 2,979 (4.5) 23.8 PBT margin (%) 4.1 4.4 (116.4) 25.3 Tax 1,608 1,953 (5.9) 21.4 Tax rate (%) 66.8 65.5 (103.2) (126.2) Tax rate to remain high as MAT is incurred on profitable BOT

projects, while losses offset standalone profits PAT 799 1,027 Loss/(Profit) Minority (196) 113 Minority losses on account of initial years losses in BOTs

Share of Profit/loss Asso. - - Net Profit 995 913 14.6 (8.2) Gross Block Turnover 0.7 0.8 14.5 14.6 Debtor days 71 70 (8.5) (0.9) CFO - a 11,653 10,621 CFI - b (7,700) (2,435) Includes equity investments in road assets FCF - a+b 3,953 8,187 Strong free cash flow generation as growth picks up CFF - c (8,870) (9,217) Surplus cash flow utilised to repay debt service interest Total change in cash - a+b+c (4,917) (1,030) Net change in cash doesn’t impact debt position materially Source: HDFC sec Inst Research

We expect ABL to deliver 19.5% FY19-21E revenue CAGR which will largely be driven by EPC revenue CAGR of 21.4% Jaora Nayagaon project is now being consolidated from FY17. ABL holds 36.26%, ACL holds 37.74% and Macquarie hold 26%. ABL economic interest in the project is 59.3% BOT margins to expand as toll growth picks up High tax rate as ABL pays tax on profit-making BOTs at MAT and full tax on EPC

ASHOKA BUILDCON : RESULT REVIEW 4QFY19

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Outlook And Valuation Maintain BUY with Target Price of Rs 261/sh We have valued ABL standalone on P/E basis at 15x

one-year forward Mar-21E EPS (vs 18x assigned to KNR and PNC and 15x assigned to Sadbhav Eng as per our multifactor valuation framework).

Our rationale behind BUY stance is a (1) Strong EPC order book with ~2.3x increase over the FY18-21E period to Rs 158bn, (2) Stable balance sheet (Conso FY21E net D/E at 3.6x), and (3) Limited equity requirement over the next 2 years (~Rs 5-6bn). Further, with the reduction in share of T&D revenue in the mix, the working capital cycle may improve, leaving scope for further balance sheet improvement.

ABL has guided for stable margins around 12.5%. Further, multiple is supported by ABL’s (1) Diversified presence in roads and T&D segments, the biggest beneficiary of government spending (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 ABL’s 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 51/sh (1.1x of ABL invested equity).

We maintain BUY with TP of Rs 261/share. We peg (1) Standalone EPC business at Rs 190/share (15x Mar-21E EPS) and (2) ABL BOT projects at Rs 51/share (3) Land at 0.5x historical costs at Rs 5/share & (4) Likely equity investments of Rs 15/sh at 1x P/BV to be invested over FY19-20E.

SOTP Valuation

Segment Project Value (Rs mn)

Value for ABL (Rs mn)

@ 61% stake

Per share value (Rs/sh) @ 61% stake Comments

Ashoka Concessions Ltd 22,964 7,575 24 DCF using 14% WACC ABL direct Projects 15,906 6,630 27 DCF using 14% WACC Total BOT Value 38,870 14,205 51

Standalone construction - EPC 53,456 190 Standalone 15x Mar-21E EPS

Land 1,391 5 0.5x P/BV

New HAM and CGD Equity 4,250 15 1x P/BV of likely equity investment in FY19-21E

SOTP Value 73,329 261 Source: HDFC sec Inst Research

We value ABL’s BOT portfolio at Rs 51/share (1.1x invested equity) We have valued ABL standalone on P/E basis at 15x one-year forward Mar-21E EPS (vs 18x assigned to KNR and PNC and 15x assigned to Sadbhav Eng as per our multifactor valuation framework) Real Estate land holding at Rs 7/share (0.5x P/BV) and expected equity investments at Rs 15/share Maintain BUY with TP of Rs 261/sh

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Income Statement (Consolidated) Year ending March (Rs mn) FY17 FY18 FY19 FY20E FY21E Net Revenues 29,797 36,030 49,301 58,058 67,726 Growth (%) 5.5 20.9 36.8 17.8 16.7 Material Expenses 18,245 22,264 31,916 38,604 47,414 Employee Expenses 1,182 1,411 1,884 2,072 2,280 Other Operating Expenses 863 959 1,559 1,621 1,686 EBIDTA 9,506 11,396 13,943 15,761 16,347 EBIDTA Margin (%) 31.9 31.6 28.3 27.1 24.1 EBIDTA Growth (%) 3.5 19.9 22.3 13.0 3.7 Depreciation 2,640 2,914 2,582 3,904 4,277 EBIT 6,866 8,482 11,360 11,857 12,070 Other Income (Incl EO items) 815 515 1,372 781 790 Interest 9,078 9,938 10,213 10,230 9,881 PBT (1,397) (941) 2,519 2,407 2,979 Tax 698 817 1,709 1,608 1,953 Minority Interest/Share of associates (194) (55) (68) (196) 113 RPAT (1,901) (1,703) 879 995 913 Share Profit/(loss) from associates (151) 592 (10) - - EO Items - (601) - - APAT (2,052) (1,111) 267 995 913 APAT Growth (%) 270 (46) (124) 273 (8) Adjusted EPS (Rs/sh) (11.0) (5.9) 1.0 3.5 3.3 EPS Growth (%) 270 (46) (116) 273 (8)

Source: Company, HDFC sec Inst Research

Balance Sheet (Consolidated) Year ending March (Rs mn) FY17 FY18 FY19P FY20E FY21E SOURCES OF FUNDS Share Capital 936 936 1,404 1,404 1,404 Reserves 15,607 15,815 16,281 14,694 14,951 Total Shareholders’ Funds 16,543 16,751 17,685 16,098 16,354 Minority Interest 1,169 937 1,189 994 1,107 Long Term Debt 45,488 47,071 54,099 54,599 54,619 Short Term Debt 2,056 632 2,735 4,235 5,885 Total Debt 47,544 47,703 56,834 58,834 60,504 Net Deferred Taxes (327) (394) (545) (545) (545) Other Non Current Liabilities 28,486 30,076 29,523 29,886 30,254 TOTAL SOURCES OF FUNDS 93,415 95,073 104,687 105,268 107,675 APPLICATION OF FUNDS Net Block 80,161 78,748 79,166 83,261 82,059 CWIP/Intangible assets under development 366 464 680 691 772

Investments 1,462 1,964 1,670 2,000 2,000 Other Non Current Assets 5,268 10,107 15,299 19,299 19,869 Total Non-current Assets 87,257 91,283 96,814 105,251 104,700 Inventories 3,596 4,195 4,265 6,618 7,754 Debtors 3,609 6,890 10,483 11,295 13,062 Cash & Equivalents 1,424 3,040 3,507 2,386 1,355 Other Current Assets 11,830 9,692 15,910 17,586 20,358 Total Current Assets 20,459 23,817 34,164 37,885 42,528 Creditors 5,744 6,493 8,182 11,472 12,569 Other Current Liabilities & Provns 8,557 13,533 18,109 26,396 26,983 Total Current Liabilities 14,301 20,026 26,292 37,868 39,553 Net Current Assets 6,158 3,791 7,872 17 2,976 TOTAL APPLICATION OF FUNDS 93,415 95,073 104,687 105,268 107,675 Source: Company, HDFC sec Inst Research

ASHOKA BUILDCON : RESULT REVIEW 4QFY19

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Cash Flow (Consolidated) Year ending March (Rs mn) FY17 FY18 FY19P FY20E FY21E Reported PBT (1,397) (941) 1,317 2,407 2,979 Non-operating & EO items (673) 391 (782) (781) (790) Interest expenses 9,078 9,938 10,213 10,213 10,230 Depreciation 2,640 2,914 2,582 3,904 4,277 Working Capital Change (442) (955) (3,534) (2,483) (4,122) Tax Paid (933) (1,196) (1,709) (1,608) (1,953) Minority Interest and other misc items 0 0 0 0 0

OPERATING CASH FLOW ( a ) 8,274 10,152 8,088 11,653 10,621 Capex (1,317) (1,591) (3,151) (8,151) (3,225) Free cash flow (FCF) 6,957 8,561 4,937 3,502 7,396 Investments 531 (430) 294 (330) 0 Interest Income 157 242 771 781 790 INVESTING CASH FLOW ( b ) (629) (1,779) (2,086) (7,700) (2,435) Share capital Issuance - - - - - Debt Issuance 599 4,286 9,131 2,001 1,670 Interest expenses (9,078) (9,842) (10,213) (10,213) (10,230) Dividend (180) (361) (657) (657) (657) FINANCING CASH FLOW ( c ) (8,659) (5,917) (1,740) (8,870) (9,217) NET CASH FLOW (a+b+c) (1,014) 2,456 4,262 (4,917) (1,030) EO Items, Others 876 36 (3,795) - - Closing Cash & Equivalents 1,425 3,040 3,508 2,386 1,355

Source: Company, HDFC sec Inst Research

Key Ratios (Consolidated) FY17 FY18 FY19P FY20E FY21E PROFITABILITY (%) GPM 38.8 38.2 35.3 33.5 30.0 EBITDA Margin 31.9 31.6 28.3 27.1 24.1 EBIT Margin 23.0 23.5 23.0 20.4 17.8 APAT Margin (6.9) (3.1) 0.5 1.7 1.3 RoE (12.2) (6.7) 1.5 5.9 5.6 RoIC 11.2 17.5 3.9 3.9 4.1 RoCE 12.2 18.5 3.6 4.2 4.1 EFFICIENCY Tax Rate (%) (50.0) (86.8) 67.8 66.8 65.5 Fixed Asset Turnover (x) 0.3 0.4 0.5 0.6 0.6 Inventory (days) 44 42 32 42 42 Debtors (days) 44 70 78 71 70 Other Current Assets (days) 145 98 118 111 110 Payables (days) 70 66 61 72 68 Other Current Liab & Provns (days) 75 115 118 152 134 Cash Conversion Cycle (days) 88 30 48 (1) 20 Debt/EBITDA (x) 5.0 4.2 4.1 3.7 3.7 Net D/E 2.8 2.7 3.0 3.5 3.6 Interest Coverage 0.8 0.9 1.1 1.2 1.2 PER SHARE DATA EPS (Rs/sh) (11.0) (5.9) 1.0 3.5 3.3 CEPS (Rs/sh) 2.1 6.4 10.1 17.5 18.5 DPS (Rs/sh) 2.0 2.0 2.0 2.0 2.0 BV (Rs/sh) 58.9 59.7 63.0 57.3 58.3 VALUATION P/E (11.7) (21.6) 134.7 36.1 39.4 P/BV 2.2 2.1 2.0 2.2 2.2 EV/EBITDA 8.6 7.1 6.4 5.9 5.8 EV/Revenues 2.8 2.2 1.8 1.6 1.4 OCF/EV (%) 0.1 0.1 0.1 0.1 0.1 FCF/EV (%) 8.5 10.6 5.5 3.8 7.8 FCFE/Market Cap (%) (4.2) 8.4 10.7 (13.1) (3.2) Dividend Yield (%) 1.6 1.6 1.6 1.6 1.6

Source: Company, HDFC sec Inst Research

ASHOKA BUILDCON : RESULT REVIEW 4QFY19

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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

Date CMP Reco Target 10-Jul-18 160 BUY 233

15-Aug-18 138 BUY 225 11-Oct-18 108 BUY 210 6-Nov-18 121 BUY 223 10-Jan-19 133 BUY 246 31-Jan-19 120 BUY 262 9-Apr-19 131 BUY 262

23-May-19 120 BUY 261 25-May-19 128 BUY 261

90

140

190

240

290

May

-18

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct

-18

Nov

-18

Dec-

18

Jan-

19

Feb-

19

Mar

-19

Apr-

19

May

-19

Ashoka Buildcon TP

RECOMMENDATION HISTORY

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