Ashoka Buildcon (ASBL) Q2FY22 (standalone) revenue and EBITDA came lower than our and consensus estimate. This is led by delay in execution due to heavy monsoon. At EBITDA level, result is lower than our and consensus estimate by 15%. ASBL has revenue guidance at 20% YoY increase for FY22E and margins at ~12-12.5%. H1FY22 Order book at Rs 120 billion (equals 3x TTM Revenue) with Roads & Railway at 68%. YTDFY22 total order inflow was strong at Rs 33.5 billion.

"We have introduced FY24E and roll forward TP at Rs 135. Maintain BUY. ASBL has renegotiated the terms of shareholders agreement regarding the Investors exit options from the proceeds of the sale of ACL assets. The commitment has been revised to Rs 11 billion from Rs 15.3 billion, this is positive for ASBL," stated IDBI Capital Equity Research.

Key highlights and investment rationale

Q2FY22 Snapshot: ASBL reported Q2FY22 revenue at Rs 9 billion, +5% YoY / -9% QoQ. Lower revenue growth was led by delayed start in the projects due to heavy monsoon. EBITDA stood at Rs 1 billion (-19% YoY / -12% QoQ) with EBITDA margin of 11.5%. PAT at Rs 0.9 billion (-9% YoY / -6% QoQ). EBITDA margin was lower YoY and QoQ and ASBL has guided for EBITDA margin of ~12-12.5% for FY22E. On execution front, company expects the momentum to pick-up in H2FY22.

Order inflow remains strong: H1FY22 Order book at Rs120bn (equals 3x TTM Revenue) with Roads at 61%, power T&D 16%, EPC building at 16% and Railway at 7%. During the quarter company has received orders worth Rs 18.7 billion. YTDFY22 total order inflow stood at Rs 33.5 billion.

Stock catalyst: Catalyst for stock performance is conclusion of ACL asset sale, execution momentum and orders win. ACL stake sale is key event to watch and will remove overhang on stock performance and provide CF for future growth to ASBL. Stock at 5x FY24E EPS is trading at -1 STD of its historical average.

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