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Company performance

Ashoka Buildcon (ASBL)’s revenue was Rs. 9.2bn (+5%/-9% YoY/QoQ), EBITDA stood at Rs. 1.05bn (-19% YoY, -12% QoQ), with an EBITDA margin at 11.5% (-244/-265 bps YoY/QoQ). The company additionally reported a PAT of Rs. 0.9bn. The company’s execution was subdued, largely on account of the monsoon. Including the recently-won orders, the order book (OB) stands at Rs. 120bn. The company has reduced its FY22 revenue growth guidance from 25% to 20%. The SBI Macquarie deal was renegotiated earlier in Oct-21 for consideration of a minimum of Rs. 11bn, with Dec-21 as the deadline for completion.

Comments by HDFC Securities

According to HDFC Securities, the company had a “Subdued quarter. We maintain BUY and cut our EPS along with TP to Rs. 157 (9x Sep-23E EPS), given the cut in guidance and higher share in the mix from EPC orders vs HAM. This may lower the EBITDA margin as HAM projects have higher margins.”

About the company

Ashoka Buildcon is a leading construction and highway developer in India. Ashoka Buildcon is an integrated EPC, BOT & HAM player in the country, with a portfolio of a major 39 PPP projects. The company has operated in more than 20 states across India, completing projects for Central and State Governments.

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

Target Price

The Current Market Price (CMP) of Ahluwalia Contracts is Rs. 450. The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 519. Hence the stock is expected to give a 15% return, in a Target Period of 1 year.

Company performance

“Ahluwalia Contracts (AHLU) reported a revenue/EBITDA/APAT beat of 24/(1.1)/(1.4)%. Whilst execution normalized since the start of Q2FY22, commodity price volatility negatively impacted margins,” the brokerage firm informs. Given robust execution, AHLU has increased the earlier 15-20% revenue growth guidance for FY22 to 20-25% and, given benign commodity prices, it lowered 11-12% EBITDA margin guidance to ~10%. The NWC days reduced to 91, from 107 in Q1FY22.

Comments by HDFC Securities

According to HDFC Securities, “Given robust order book (OB) and execution, we have increased our estimates for FY22/23/24. We maintain Buy with an increased TP of Rs. 519 (13x multiple; Sep-23E EPS), given the robust OB, net cash balance sheet, and better RoE/RoCE than peers. We expect the uptick in growth and margin expansion to continue through H2 FY22 as Covid-19 headwinds recede.”

About the company

With specialized experience in the Construction Industry for more than 40 years, Ahluwalia Contracts, have carved a niche in the industry. Their turnover was over Rs. 1982.19 Crores for the FY 2020-21. they have worked for some of the most recognized commercial and institutional projects. They are also associated with ITC hotels and AIMS hospitals for construction.

Disclaimer

The above stock has been picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

Q2FY22 results of IRCON

In its research report, the brokerage has stated that “IRCON international (IRCON) Q2FY22 PAT came 10% higher than our estimate. This is led by higher other income. H1FY22 revenue increased by 71% YoY and IRCON targets FY22E Revenue at ~Rs60-70bn but expects softness in margin. Based on guidance, H2FY22 implies revenue to increase by 1% to 29% YoY. But due to the expectation of weak margin we have cut EPS for FY22E/23E by 9%/10% (exhibit 8). H1FY22 Order book at Rs349bn provides revenue visibility at 6x TTM Revenue. YTDFY22 order inflow (won on competitive bidding) is at Rs27bn and additionally, the company emerged as L-1 bidder in a project worth Rs86bn. We have rolled forward TP to FY24E at Rs58, valued at PER of 10x (earlier Rs56). Company has announced a second interim dividend of Rs0.7/sh (first was Rs0.45/sh). We have modeled a total dividend of Rs2.9 for FY22E (implying div. yield of 6%). Maintain BUY rating on the stock.”

Key highlights and investment rationale for IRCON international (IRCON) according to IDBI Capital

Q2FY22 Snapshot: IRCON Revenue was up 47% YoY at Rs14bn. EBITDA stood at Rs1bn (+49% YoY/ +39% QoQ) with EBITDA margin at 6.9%. Q2FY22 PAT at Rs1.3bn (+74% YoY, +57% QoQ). This is led by higher other income at Rs0.8bn vs Rs0.5bn YoY. Segment-wise, Domestic EBIT margin was higher QoQ/ YoY. But International EBIT was at loss due to a one-off.

L1 in Rs86bn project: H1FY22 IRCON’s Order book stood at Rs349bn equals 6x TTM Revenue with 88%/ 5%/ 7% of order book from Railway/ Highway/ Other. In other, it has a solar power segment worth Rs26bn via e-Reverse auction with a Viability Gap Funding (VGF). Equity investment in solar project is expected at Rs4bn and IRCON has the option to unlock the value at IRR of 14%. Geography wise international order book at 4% and domestic at 96%.

FY22E PAT guidance at Rs4.8bn: IRCON targets FY22E Revenue/ PAT at ~Rs60-70bn/ Rs4.8bn. And PAT margin is expected at 8-9% for H2FY22. Company re-iterated it’s FY23E revenue target of Rs100bn.

Disclaimer

The above is picked from the brokerage report of IDBI Capital. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.