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2QFY22 results of Ashoka Buildcon Limited

According to the brokerage “Ashoka Buildcon (ASBL)’stopline grew 5% YoY to INR9.2b in 2QFY22 and was 8% below our estimate. It de-grew 9% on a QoQ basis. The EBITDA margin was down 341 bps YoY and came in at 11.5% in 2QFY22 (in line with our estimate). EBITDA/PAT fell 19%/9% YoY to INR1.1b/INR0.96b (v/s our estimate of INR1.2b/0.8b). Other income grew 19% YoY to reach INR590m in 2QFY22.”

Motilal Oswal has stated that the company’s “OB stood at ~INR119b, with an OB/revenue ratio of ~2.8x, providing comfort on revenue growth. The management’s major focus in the future would be on Roads/Railways, which has 70% share of the order book. The Building, Power T&D, and other segments account for a 30% share. The pending exit of the private equity investor in its asset portfolio would be a key monitorable. A strong order book – coupled with a healthy ordering outlook and continuous improvement in the balance sheet – augurs well for ASBL”

Key highlights from management commentary according to Motilal Oswal

• The management has revised the revenue growth guidance for FY22 to 20%, from 25% provided earlier, due to delays witnessed in commencing various projects.
• The total equity requirement for the 10 HAM projects is INR13.4b, of which INR9.4b has already been invested.
• For FY22/FY23, the incremental equity requirement is INR1.6b/INR1.4b.
• In 2QFY22, the BOT division recorded toll collections of INR2.4b (against INR2.2b in 2QFY21).
• The management has renegotiated the terms of the shareholder agreement with SBI Macquarie; the commitment to the investors has been revised from INR15.3b to INR11b, with a cap of INR12b.

Buy Ashoka Buildcon Limited with a target price of Rs 175

Motilal Oswal has said the company’s “current OB remains strong (~INR119b). The book-to-bill ratio stands strong (~2.8x), which provides comfort and revenue visibility for more than two years. Net debt-to-equity at the standalone level stood at 0.1x in FY21. ASBL is well placed to fund its equity commitment. We expect net debt-to-equity to remain at 0.1x/0.01x for FY22E/FY23E, making it one of the strongest Road players in the sector.”

In its research report, the brokerage has claimed that “A strong order book and continuous improvement in the Balance Sheet augurs well for ASBL. Our TP of INR175/share is based on the SoTP methodology. We value the: a) EPC business at 5x Mar’23E EPS, and b) BOT business on an NPV basis. We maintain our Buy rating.”

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. 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 Godrej Consumer Products

According to the brokerage, the company’s “Consolidated revenue grew 9%YoY driven by 10%YoY growth in India business (on a base of 10%YoY) while the international business grew 7% (on a base of 11%YoY). Revenue from home care grew 5%YoY (India business +7%YoY) while from Personal Care grew 10%YoY (India business 12%YoY). GCPL gained market share in soaps. In international market revenue from; Africa, USA & Middle East grew 15% YoY (16% CC), Latin America & SAARC decline 3% YoY (+11% CC), Indonesia remained flat YoY (-2% CC).”

The brokerage has claimed that the company’s “Gross margin contracted sharply by 616bp YoY to 50% largely due to inflation in palm oil price. However, EBITDA margin contracted only 223bp YoY to 21% due to cost savings (lower ad-spends, employee cost, other expenses). Adjusted PAT grew 5%YoY to Rs 5bn.”

Buy Godrej Consumer Products with a target price of Rs 1,252

IDBI Capital has reported that “Godrej Consumer Products (GCPL) result was in-line with our estimates. India business performance has been resilient (10%YoY revenue growth on a base of 10%). Home care and personal care grew at a high single digit and double digit rate led by market share gains in soap and hair color. Positively; GCPL has launched Goodknight Jumbo Fast Card nationally while Godrej Expert Easy 5 minute shampoo is scaling up well.”

In its research report, IDBI Capital has reported that “In international business; South Africa performed well while other markets remained soft. Indonesia continues to underperform for 5th consecutive quarter largely due to macroeconomic uncertainties. Gross margin contraction has been steep primarily due to inflation in palm oil. Management expects the operating margin to normalize by 4QFY22. Accordingly, we have trimmed our EPS estimate by 6% in FY22E. We have introduced FY24E. We maintain our BUY rating and positive view on GCPL. Our revised TP stands at Rs 1,252 (vs previous TP of Rs 1,171) valued at 50x FY24E EPS.”

Disclaimer

The stock 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.