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Migrating to clarity
Ashoka Buildcon Ltd (ABL) Q4FY11 results, key highlights was
change in BOT depreciation policy from SLM to traffic
proportion and shift from AS21 to IFRS for booking of revenue
and profit from internal EPC work. Hence on a YoY basis the
results are not comparable, without accounting changes the
PAT for FY11 would have been Rs710mn i.e. 12% down YoY
basis, while the adjusted PAT is Rs1008mn, but excluding the
one time loss of Rs580mn for BOT projects (Rs450mn overlay
exp and Rs130mn revenue loss), the adjusted PAT would have
been Rs1300mn. Based on the new order book we marginally
increase standalone earnings, while BOT valuation is brought
down as revenue estimates for 4 BOT projects have been
marginally lowered. We maintain our BUY recommendation
with a lower target price of Rs364 (Rs390 earlier).
Change in accounting policy…
Depreciation on BOT assets will be henceforth booked on traffic
proportion against SLM earlier. The total impact is Rs537.4mn
increase in reserves on a retrospective basis of which Rs162.6mn is
the impact for FY11. Similarly now internal EPC revenues would be
recognised as income as per IFRS, accordingly Rs2859.9mn of
revenue and Rs168.8mn of profits has been booked in FY11. On a
like to like basis if such changes are excluded the PAT for FY11
would have been ~Rs710mn i.e. 12% lower than FY10.
One time expense impact profitability…
ABL has incurred Rs450mn towards overlaying for 2 BOT projects,
and during the process lost Rs130mn of revenue. Hence with the
above mentioned accounting changes the adjusted PAT for FY11
would have been ~Rs1300mn. The management has mentioned that
this overlaying is one-time in nature. No major maintenance exp is
likely for the next two years.
VALUATION AND RECOMMENDATION
Equity invested till date by ABL is ~Rs4.5bn, which would increase to
Rs7bn & Rs10bn by FY12E and FY13E, we value BOT (DCF) at
equity multiple of 1.6x times and 1.1x times on FY12E and FY13E i.e.
Rs11bn. Over FY10-13E, we expect revenue for standalone business
to grow at 22.3% CAGR and PAT to grow at 12.4% CAGR. We value
this business at 9x FY12E adjusted earnings of Rs17.3 (EPC).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Migrating to clarity
Ashoka Buildcon Ltd (ABL) Q4FY11 results, key highlights was
change in BOT depreciation policy from SLM to traffic
proportion and shift from AS21 to IFRS for booking of revenue
and profit from internal EPC work. Hence on a YoY basis the
results are not comparable, without accounting changes the
PAT for FY11 would have been Rs710mn i.e. 12% down YoY
basis, while the adjusted PAT is Rs1008mn, but excluding the
one time loss of Rs580mn for BOT projects (Rs450mn overlay
exp and Rs130mn revenue loss), the adjusted PAT would have
been Rs1300mn. Based on the new order book we marginally
increase standalone earnings, while BOT valuation is brought
down as revenue estimates for 4 BOT projects have been
marginally lowered. We maintain our BUY recommendation
with a lower target price of Rs364 (Rs390 earlier).
Change in accounting policy…
Depreciation on BOT assets will be henceforth booked on traffic
proportion against SLM earlier. The total impact is Rs537.4mn
increase in reserves on a retrospective basis of which Rs162.6mn is
the impact for FY11. Similarly now internal EPC revenues would be
recognised as income as per IFRS, accordingly Rs2859.9mn of
revenue and Rs168.8mn of profits has been booked in FY11. On a
like to like basis if such changes are excluded the PAT for FY11
would have been ~Rs710mn i.e. 12% lower than FY10.
One time expense impact profitability…
ABL has incurred Rs450mn towards overlaying for 2 BOT projects,
and during the process lost Rs130mn of revenue. Hence with the
above mentioned accounting changes the adjusted PAT for FY11
would have been ~Rs1300mn. The management has mentioned that
this overlaying is one-time in nature. No major maintenance exp is
likely for the next two years.
VALUATION AND RECOMMENDATION
Equity invested till date by ABL is ~Rs4.5bn, which would increase to
Rs7bn & Rs10bn by FY12E and FY13E, we value BOT (DCF) at
equity multiple of 1.6x times and 1.1x times on FY12E and FY13E i.e.
Rs11bn. Over FY10-13E, we expect revenue for standalone business
to grow at 22.3% CAGR and PAT to grow at 12.4% CAGR. We value
this business at 9x FY12E adjusted earnings of Rs17.3 (EPC).
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