Motilal Oswal: Ashoka Buildcon Delivers A Robust Quarter; Debt Reduction Augers Well
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Motilal Oswal Report
Ashoka Buildcon Ltd.’s Q1 FY21 results were robust. Top line decline was limited to Rs 5.7 billion (18% above estimate).
On account of one-off items as well as release of contingencies, Ebitda and profit after tax came in well above expectations.
A key surprise was the reduction in gross debt to Rs 2.4 billion (versus Rs 4 billion at end FY20), indicating strong focus on cash flow management. Strong execution over the past two years is commendable.
However, the pending private equity exit in the asset portfolio is an overhang on the stock. We have increased our FY21E earning per share by 16%, but FY22E earning per share remains broadly unchanged.
Strong order book and continuous improvement in the balance sheet augurs well for Ashoka Buildcon.
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