Ashoka Buildcon: Road to progress

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.

Disclaimer –
This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.