Ashoka Buildcon Expects 25-30% Growth Next Year After A Stagnant FY21

Ashoka Buildcon Ltd. expects 25-30% growth in the upcoming financial year after a “stagnant” FY21, at a time when India Inc. begins to recover from the pandemic-related disruptions.

While upcoming growth would depend on new orders, 25-30% growth is “very much doable” with the current order book in hand, according to Satish Parakh, the company’s managing director. He told BloombergQuint’s Sajeet Manghat in an interview that the company isn’t looking to raise capital from the markets.

Parakh is convinced that business will pick up during January-March, with the number of orders peaking in March.

He said the company has seen a “mixed-bag” of revenue growth in various projects compared to a year ago. While its highway widening project between Dhankuni and Kharagpur in West Bengal registered revenue growth of more than 15%, for a few others it stood at 8-10% and 3-4%.

Parakh noted that the National Highways Authority of India’s efforts and good relations with states lightened the burden of land acquisition—bolstering hopes for the upcoming growth.

And with 90% recovery of workers returning to project sites, losses suffered in first quarter and the Covid-19 period will be recovered in the working seasons of Q3 and Q4, he said.

The construction and engineering company which builds highways and bridges, sees some challenges, too.

Ashoka Buildcon’s facing a 10% shortage of skilled and semi-skilled labour and is staggering optimal resumption of services as a result.

Other Highlights

• Cash generated in FY22 will be in surplus, Parakh said.
• Capital needed for hybrid annuity model projects might be generated internally. Refinancing of such projects are in the process.
• For Ashoka Buildcon, interest rates are now rational—closing at 8-8.50%
• With the economy reopening, debt servicing is taken care of with increasing vehicular traffic.
• Cooperative state governments and timely payments has aided the company’s bounce-back, Parakh also said.

Watch the entire conversation here: