Key beneficiary of NHAI’s expected awarding • Ashoka Buildcon :: ICICI Securities, report

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On a strong footing Ashoka Buildcon :: HDFC Sec, report

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BUY Ashoka Buildcon :: ICICI Securities, pdf link

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Well funded – Gearing up for big league…
Ashoka Buildcon (ABL) is a leading road developer with a portfolio of 21
road projects encompassing ~5,000 km. ABL’s road portfolio is well
funded courtesy SBI Macquarie’s (SBM) | 700 crore commitment for a 34-
39% stake in ACL (a subsidiary with seven major projects) at implied P/BV
of 1.3x. With this secured funding, we expect ABL’s gross daily collection
to grow 1.4x to | 2.8 crore/day in FY14-16E. With SBI Macquarie’s
commitment of an additional | 650 crore, we believe ABL is also likely to
be a key beneficiary of road awarding opportunities in H2FY15. On the
EPC front, with an order book of | 3042 crore (1.5x order book to bill ratio
on TTM), L-1 bids of | 1030 crore in the T&D segment and new road
awarding opportunities from H2FY15 onwards, we believe ABL’s EPC
revenues and earnings will grow at a CAGR of 19.7% and 15.2%,
respectively, during FY14-FY16E. Hence, we initiate coverage on ABL with
a BUY recommendation with an SOTP based target price of | 166/share.
Transforming into big league player with SBI Macquarie deal…
In August 2012, SBI Macquarie committed | 700 crore (with an additional
| 100 crore contingency reserve) for a 34-39% stake in Ashoka
Concession (ACL) which has seven of its big ticket project. The deal, at
implied P/BV of 1.3x (assuming 34% dilution), ensures equity funding
towards ACL’s project portfolio. With secured funding, we expect ABL’s
gross daily toll collection to grow 1.4x to | 2.8 crore/day in FY14-FY16E.
EPC revenues to grow at 19.7% CAGR during FY14-16E...
ABL’s order book currently stands at | 3042 crore, 1.5x order book to bill
ratio on a TTM basis. Beside this, ABL has L-1 bids worth | 1,030 crore in
the T&D segment. Going ahead, we anticipate ABL’s revenues and PAT
will grow at a CAGR of 19.7% and 15.2%, respectively, during FY14-16E
on the back of a strong order book, aggressive road awarding
opportunities in H2FY15E and opportunities from the T&D segment.
ABL to be key beneficiary from new opportunities, initiate with BUY…
Considering the strong track record, well funded BOT road project
portfolio and healthy order book, we remain positive on its long term
prospects. With SBI Macquarie’s commitment of an additional | 650
crore, we believe ABL is likely to be a key beneficiary of the road
awarding opportunities in H2FY15. Hence, we initiate coverage on ABL
with a BUY recommendation and an SoTP target price of | 166 per share.
We have valued ABL’s BOT projects at | 41/share, EPC business (net of
debt) at | 70/share (5x FY16 EV/EBITDA) and ACL at | 55/share.



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Ashoka Buildcon - Religare

On a steady wicket despite sluggish order awards
As per our recent interaction with ASBL’s management, order progress in
the roads sectorremains sluggish and is likely to be back-ended this year.
In our view, the recent decision by government to allow exit mechanisms for
road developers (by introduction of substitute developers) from projects will
alleviate the bleak scenario in road sector. We remain positive on ASBL
given healthy revenue visibility across key projects in the next 12-24
months and a well-capitalised balance sheet. Reiterate BUY

`BOT´ is the way Ashoka Buildcon :: Centrum

`BOT´ is the way
Ashoka Buildcon (Ashoka) has moved up the value
chain from being just an EPC player to a BOT developer.
With an asset base of over 18 owned projects (12 road
BOT and 6 foot over bridges) and 7 road BOT projects in
Ashoka Concessions (ACL), the company has developed
strong visibility. With a backward integrated EPC
model, the company is well placed to capture better
than industry margins through better project
management skills. Additionally, SBI-Macquarie’s
Rs7.0bn capital infusion with further commitments has
provided visibility for securing large size road projects
in future. We believe the company will grow at a faster
clip going ahead due to the steady stream of earnings
from its EPC business coupled with rising cash flows
from toll collections. We initiate coverage on the stock
with a ‘Buy’ rating and a target price of Rs332.

Ashoka Buildcon: Speeding up…: MSFL research

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Ashoka Buildcon is fast transforming from a pre-dominantly state road BOT player concentrated in central & western India to a pan-India player with National Highways contributing in a major way to its road BOT portfolio. We expect its operational lane kms to rise from 1455kms in FY11 to 4240kms in FY15. Also, its existing portfolio is a cash cow with most of its operational roads being able to re-leverage which is unheard of amongst its peers enabling investment in growth opportunities without dilution. Its experience in execution has helped it deliver projects on or before time lending credibility to its EPC execution skills. We expect Ashoka Buildcon to register a revenue & net profit CAGR of 30% & 16% over FY11-14E. The company looks attractive based on both NPV & earnings multiples. We initiate coverage on Ashoka Buildcon with a Buy recommendation and a target price of ` 251.
Rapid transformation to a national player
Ashoka Buildcon has within a span of last 4 years scaled up its BOT road portfolio from 2105 lane kms to 4708 lane kms today. Currently, 2105 lane kms are operational with state projects contributing 65%. We expect major NH projects to be operational over FY14E-15E taking the operational lane kms to 4240 lane kms with NH’s contributing 68%. We expect revenue & EBIDTA to grow at a CAGR of 30% & 16% respectively over FY11-14E.
Right mix within portfolio; new wins concentrated on NH-6
We believe Ashoka Buildcon’s road portfolio has a right mix with its low capital state projects delivering high growth and are cash cow to the group while new NH project wins are concentrated on NH6 which connects resource rich east to industrialized western India & a long concession period captures the potential for long term growth opportunity of this route.
Strong orderbook; captive projects to drive growth
Ashoka Buildcon has more than a decade experience in road construction. We expect execution of its current order book stands of ` 43.1bln, 86% of which is captive to drive revenue growth of 30% over FY11-14E. Although, the equity funding for the pojects is not tied up we expect the company to raise resources through private equity funding
Valuation
At CMP of ` 196, the company is trading at 1.0x FY12E & 0.9x FY13E P/BV & 7.8x FY12E & 7.9x FY13E EV/EBIDTA respectively. A sizeable order book, and expansion of BOT portfolio firmly places the company on a higher growth trajectory. We initiate coverage with a Buy recommendation and a price target of ` 251. Key risks to our recommendation include shortfall in funding of its BOT projects and/or higher than expected dilution of its BOT road portfolio to PE investors.

Investment Focus - Ashoka Buildcon: Buy :: Business Line,

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Road developer Ashoka Buildcon is a good bet for investors with a long-term perspective. At Rs 196, the stock trades at 9.4 times trailing twelve-month earnings and a reasonable 7.7 times the estimated earnings for 2012-13. It has a strong portfolio of 12 completed road projects on which it collects toll. Order inflow, too, has held up, with the developer winning two large-scale road development projects of over Rs 1,000 crore each, besides a handful of power transmission and distribution projects in the last two quarters. It is also partnering other infrastructure majors such as Larsen & Toubro in executing high-value projects, making a transition from a State-level developer to a national player.

In-house manufacture of ready-mix concrete and bitumen, has helped it maintain healthy operating margins. While debt is not low at (consolidated) 1.4 times, interest cover is comfortable at just over 3 times.

STRONG PORTFOLIO

Barring one, all of Ashoka's road projects have seen a steady growth in toll collections. In the December '11 quarter, for instance, comparable toll revenues grew 19 per cent over the year-ago period. The coming financial year may see an earnings boost from toll collections from three new projects. While Ashoka primarily executes its own development projects, it has taken on an average of Rs 1,000 crore in third-party contracts. Owing to slow project awards in the road space in the last couple of quarters, third-party orders did not pick up. With the prospects for new projects now looking up, Ashoka could again secure such contracts. Besides roads, Ashoka has contracts worth Rs 622 crore in the power space, with an average execution period of 24 months. The total order book, though, at Rs 4,165 crore, is below the Rs 4,672 crore at end-March '11.

Consolidated revenues have grown at an annual 54 per cent over the last three years, while net profits grew 51 per cent. For the nine months ended December '11, revenues were up 47 per cent and earnings expanded by 10 per cent.

Backward integration has helped maintain superior operating margins of 23-24 per cent. In the last three quarters, though, due to delays by the NHAI stretching working capital and maintenance costs in a couple of projects, margins slipped to around 21 per cent.

Ashoka Buildcon ::Ambit India Access, December 2011

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Ashoka Buildcon
A large number of operational assets, relatively low debt:equity and a mix
of operational highways (national/state) make Ashoka Buildcon a strong
player compared to its peers. Operational roads experience along with its
in-house road project execution capabilities (from traffic estimation to
concrete manufacturing to road construction) are key the levers of its
strategy to expand into larger NHAI projects. However, currently it lacks
the adequate equity capital to fund its recent project wins and bid for new
projects.
Company Background
Ashoka Buildcon is an infrastructure company engaged in constructing and
operating roads and power T&D projects in India. The company entered the road
BOT space in 1997, has completed 21 road BOT projects and currently has 6 BOT
projects under execution. It also has 15 ready-mix Concrete (RMC) facilities and
own construction equipment bank which supports its EPC division. The company
also undertakes toll collection for self-owned and Government roads/bridges.
Recent Financial Performance
In 1HFY12, whilst the overall revenues grew 44% (YoY) driven by high growth in
both the EPC (45% growth YoY) and the BOT (42% growth YoY) segments, overall
EBITDA margin declined by 447bps (YoY) as higher direct expenses impacted
profitability in both the segments. Further, in 1HFY12, higher interest (79% YoY
increase) and depreciation expenses (58% YoY increase due to change in method
of amortizing intangibles) resulted in overall PAT margin of 6.7% (10.5% in
1HFY11). Debt: equity increased to 1.6x at end of Sept-11 (1.4x at end of Mar-11).
Outlook
Ashoka’s scale and operational experience should be considered alongside its
balance sheet requirements and past financial re-leveraging knowledge before
forming any investment decision. Lack of meaningful consensus estimates for
Ashoka limit availability of any forward looking valuation multiples. On FY11
basis, Ashoka is trading at 1.2x P/B, which is at a discount of 25% to peers (ITNL
IRB and Sadbhav); lack of equity could be one of the reasons for such a discount.

BUY Ashoka Buildcon Initiating Coverage: Emkay

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Ashoka Buildcon

Reco: BUY

CMP: Rs240

Target Price: Rs337

Stepping into the big league

·      ABL, an integrated BOT developer with 18 BOT projects & Rs83bn assets, is now a formidable national player with 3 NHAI order wins of over Rs 40 bn in the last 18 months

·      ABL boasts of a lucrative cash generating BOT portfolio with weighted average balance life of 22 years and weighted equity IRR of 16%, creating sustainable shareholder value

·      52% of portfolio already operational, another 40% set to commence toll collection in FY12E. Proven track record - 15 year exp. - Rs41.5bn order backlog offers growth visibility

·      EPS set to cruise at 23% CAGR (FY11-13E). ABL trading at an undemanding 11.2x FY12E earnings & 1.14x PB. BUY with SOTP target price of Rs 337, a 40% upside

Ashoka Buildcon::Takeaways Motilal Oswal Annual Global Investor Conferences

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Key Takeaways
ASBL EPC business revenue to grow 30-35%
 The Ashoka Buildcon (ASBL) management expects EPC revenue to grow 30-35% in
FY12, driven by a robust order book of INR43b. On the toll revenue front it expects
revenue of INR3.5b against INR1.9b in FY11.
 ASBL's YTDFY12 order book is INR43b, including 94% from the roads and 6% from
the power segments. In FY12 it aims at order intake of INR25b-30b.
Strong traction expected in FY12 toll business, opportunity looks promising
 On the bidding front, on a standalone basis ASBL qualified for projects worth about
INR20b as on 31 March 2011.
 Out of 24 projects, it is collecting toll on 18 and expects to start toll on two more
projects (Durg and Dhankuni) in FY12.
 NHAI plans to award 7,300km of roads over FY11-12, which will offer significant
growth opportunities to established players like ASBL.
 A portfolio of 18 operational projects covering ~3,000 lane kms with average traffic
growth of 5-7% will ensure steady revenue growth.
 The management said that in most cases, traffic growth was in line with its
expectations, except for the Bhandara project, where traffic was 10-12% less than
estimated.
Progress on projects under construction
 Construction work on the Durg and Jaora-Nayagaon projects has been substantially
completed. Toll collection is expected to start for the Durg project in 3QFY12. For
the Jaora-Nayagaon project, toll collection has begun on two of three sections. Toll
collection on the third section will start in 3QFY12.
 Other projects under construction are Sambalpur-Baragarh and Belgaum-Dharwad.
ASBL has started mobilization on the Sambalpur-Baragarh project, and construction
activity has begun on the Belgaum-Dharwad road.
Equity requirement of INR9b over the next 2-3 years
 The management said it would meet the fund requirement of INR9b through internal
accruals and from the toll projects.
Valuation and view
 The stock trades at a PER of 11x and 9x on FY12E and FY13E basis (Bloomberg
consensus). Not Rated.

ASHOKA BUILDCON: BUY, TP-Rs365 (36% upside)::PINC Power Picks August 2011

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What’s the theme?
Ashoka Buildcon (ABL) with an experience of decade in BOT road projects currently has 23 projects under its
portfolio, with 16 projects operational. ABL is amongst the few BOT developers, who has seen a complete life
cycle of project and has handed over four BOT assets back to the govt. ABL also has a strong in-house EPC
arm, which executes captive as well as third party contracts.
What will move the stock?
1) Post IPO, ABL is aiming for the next league with aggressive but calculated bidding strategy. In FY11
ABL has won projects worth more than Rs30bn. We expect ABL to maintain its market share of 3.5%
for FY12 & FY13 in NHAI bidding.
2) No dilution likely in medium term; ABL would require equity of Rs8bn in next three years, which is likely
to come from internal accrual and securitization of existing projects.
Valuation & Recommendation
We value BOT (DCF basis) at equity multiple of 1.6x and 1.1x FY12E and FY13E. Our SOTP based target
price is Rs365, where BOT is valued at Rs220 and EPC division at Rs145 at 9x FY12E earning. We have
a 'BUY' recommendation on the stock.
What will challenge our target price?
1) Further increase in interest rate, would lower IRR; 2) Lower traffic growth; 3) Slowdown in execution of
current orders; 4) Any change in government policy that may adversely affect tolling charges.

ASHOKA BUILDCON: BUY, TP-Rs363 (29% upside) :: PINC Power Picks July 2011

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What’s the theme?
Ashoka Buildcon (ABL) has experience of over a decade in BOT road projects. It has 23 projects in its portfolio
of which 16 are operational. ABL is among the few BOT developers who have seen complete life cycle of a
project. It has handed over four BOT assets back to the government. ABL also has a strong in-house EPC arm,
which executes in-house as well as third-party contracts.
What will move the stock?
1) Post IPO, ABL aims to be in the next league with an aggressive but calculated bidding strategy. In
FY11, ABL has won projects worth more than Rs30bn. We expect ABL to maintain its market share of
3.5% for FY12 and FY13 in NHAI bidding.
2) No dilution likely in the medium term; ABL would require equity of Rs8bn in next 3 years, which is likely
to come from internal accruals and securitization / stake sale of existing projects.
Valuation & Recommendation
We value ABL's BOT project (DCF basis) at equity multiple of 1.6x and 1.1x FY12E and FY13E. Our
SOTP-based target price is Rs363, with BOT valued at Rs208 and EPC at Rs155 at 9x FY12E earnings.
We have a 'BUY' recommendation on the stock.
What will challenge our target price?
1) Further increase in interest rate lowering IRR; 2) Lower traffic growth; 3) Slowdown in execution of
current orders; 4) Any change in government policy adversely affecting tolling charges

ASHOKA BUILDCON: Migrating to clarity::PINC

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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).

IDFC research, ASHOKA BUILDCON

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ASHOKA BUILDCON


Ashoka Buildcon (ABL) is an integrated road BOT player established in 1976. It was listed on the bourses in 2010.
• It has a portfolio of 23 projects, of which 18 are operational and 5 are under construction/ development. ABL has
already handed over three projects to the concessioning authorities.
• ABL posted revenues of Rs11bn and PAT of Rs757m in FY10 (standalone). The total order backlog was Rs30bn as of 15
January 2011.
• The company has its own EPC division and has constructed 44 roads and bridges on its own or through JVs/
associates. ABL has also constructed ~5.4m sqft of commercial, industrial and institutional projects. It is currently
executing Rs11.7bn worth of power EPC projects (T&D).
• ABL plans to increase its focus on the third-party EPC business in the power sector.
• It has a total debt of Rs1.5bn (including working capital debt of Rs1bn) apart from its BOT project debt of Rs11.5bn.
• The company has so far invested ~Rs3bn as its own share in road BOT projects and will need to invest a further
Rs4.5bn as equity in these projects over the next two years. ABL expects to meet the funding requirement through
internal accruals (Rs2bn-2.5bn) and the balance from securitization of toll collections in its operational projects.
• ABL expects IRRs of ~17% from its newer road assets, vis-à-vis 18-19% from older ones.

Ashoka Buildicon IPO allotment details are OUT

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You will need application number

tentative listing date of recent IPOs

Gallantt Ispat: October 11th (Monday) - Confirmed

CantabilRetail: October 12th  (Tuesday) - Confirmed

Tecpro Systems: October 12th (Tuesday) or 13th  (Wednesday) - tentative

AshokBuildcon: October 13th  (Wednesday)  - tentative

VA TechWabag: October 14th  (Thursday)  - tentative

Sea TV Network: October 14th  (Thursday)  - tentative

Final IPO oversubscription numbers for Ashoka Buildcon: QIB 25x; HNI: 14x

Ashoka Buildcon Limited

Total Issue Size	6218940
Total Bids Received	99155637
Total Bids Received at Cut-off Price	6609834
No. of times issue is subscribed	15.94

Sr.No.	Category	No.of shares offered/reserved	No. of shares bid for	No. of times of total meant for the category
1	Qualified Institutional Buyers (QIBs)	3165909	80792565	25.52
1(a)	Foreign Institutional Investors (FIIs)		45078915
1(b)	Domestic Financial Institutions(Banks/ Financial Institutions(FIs)/ Insurance Companies)		21523173
1(c)	Mutual Funds		14188335
1(d)	Others		2142
2	Non Institutional Investors	753788	10483284	13.91
2(a)	Corporates		7754733
2(b)	Individuals (Other than RIIs)		2723532
2(c)	Others		5019
3	Retail Individual Investors (RIIs)	2261364	7834008	3.46
3(a)	Cut Off		6595869
3(b)	Price Bids		1238139
4	Employee Reservation	37879	45780	1.21
4(a)	Cut Off		13965
4(b)	Price Bids		31815

Updated as on 28 September 2010 at 1900 hrs

Oversubscription details for Tecpro, Ashoka Buildcon, Sea TV IPOs

	TECPRO SYSTEMS	ASHOKA BUILDCON	SEA TV
QIB	27.99x	1.89x	0.20x
HNI	0.53x	2.89x	5.26x
Retail	0.65x	0.51x	1.40x
Total	14.17x	1.50x	1.38x
Closing date	28-Sep	28-Sep	29-Sep

MS Advisory and PMS: IPO Recommendations: Subscribe - VA TechWabag, Tecpro Systems

MS Advisory and PMS: IPO Recommendations

Subscribe: VA TechWabag, Tecpro Systems

May Subscribe: CantabilRetail, AshokBuildcon

Business Line: Ashoka Buildcon — IPO: Invest

Ashoka Buildcon — IPO: Invest

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With a sizeable order book from third parties in road and electrical works, the company is in a position to capitalise on the considerable potential in these segments.

Bhavana Acharya
Business Line

Investors may subscribe to the initial public offer of infrastructure player Ashoka Buildcon. At the upper end of its price band of Rs 297-324, the offer discounts FY-10 consolidated earnings by 22 times and estimated FY-11 earnings by 14 times. Larger players in this space such as Jaypee Infratech and IRB Infrastructure trade at valuations of 21-22 times the trailing earnings. However, Ashoka may have scope for higher growth.