Ashoka Buildcon: Road to progress
Although, Ashoka Buildcon has disappointed Dalal street by reporting subdued Q2 performance, however, the road developer has a good growth prospect given the government’s emphasis on infrastructure development.
The company’s prospects are visible in a very strong order book. Order inflows so far in FY22 stand at about Rs 3,354 crore. EPC (Engineering Procurement and Construction) order backlog stands at Rs 11880 crore, which is 3 times FY21 revenues.
Ashoka Buildcon’s earnings performance was hit by slower execution during the monsoons. Toll collections, however, improved 17% sequentially, with rise in traffic following the easing of mobility restrictions.
With the Ebitda down 9% year-on-year and 1.5% sequentially, net profit fell 8.7% year-on-year and 5.7% sequentially.
While the quarter saw soft performance due to delays witnessed in commencing various projects, the management has revised revenue growth guidance for FY22 to 20% from 25% earlier.
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.
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