In the fourth quarter of FY20, revenue declined 4 per cent year on year to Rs 12.5 billion which was in line with brokerage estimates and was better than the performance of its peers. EBITDA grew 26 per cent year on year to Rs 2.3 billion (50 per cent ahead of our est.); EBITDA margin came in at 18.2 per cent owing to release of contingencies linked to power projects and execution of higher margin projects.
Interest expense stood at Rs 209 million against brokerage estimate of Rs 332 million – a positive surprise. Adjusted PAT grew 56 per cent year on year to Rs 1.6 billion, 104 per cent ahead of brokerage estimate.
Investment Rationale
According to the brokerage, a strong balance sheet augurs well for the company: As at FY20, net D/E at standalone level was 0.1 times. Motilal Oswal believes ASBL is well placed to fund its equity commitment and expects net debt to remain at 0.2 times for FY21/FY22E, making it one of the strongest road players in the sector.
Quarterly Performance
Adjusted for valuation of the BOT assets, the stock trades at FY21/FY22E P/E of 5 times / 3.7 times against an average of 8 times for mid-cap EPC companies. While the pending exit of the private equity investor in the asset business is an overhang for the stock, the brokerage believes that it provides an attractive entry point, according to the brokerage.
The brokerage has raised its FY21/FY22E EBITDA estimates by 3 per cent/11 per cent due to a strong order book. Standalone EPS estimate revision looks higher at 32 per cent/36 per cent owing to better-than-expected balance sheet improvement. It maintains buy with revised target price of Rs 98 from Rs 92 earlier as it factors in lower toll collection in the BOT portfolio.
Financials
For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 1584.22 crore, up 23.73 per cent from last quarter sales of Rs 1280.36 crore and down -.79 per cent from last year's same quarter sales of Rs 1596.81 crore. The company reported net profit after tax of Rs 145.24 crore in the latest quarter.
Promoter/FII Holdings
Promoters held 54.3 per cent stake in the company as of March 31, 2020 while FIIs held 5.5 per cent, DIIs 31.6 per cent and public and others 8.6 per cent.
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