Ashoka Buildcon Q1 Results Review - Pressure On Margin Until Q4: IDBI Capital

IDBI Capital Report

Ashoka Buildcon Ltd.'s Q1 FY24 (standalone) profit after tax came lower than our / consensus estimates by 85%/ 80%. Lower net profit is led by lower execution (revenue up 4% only) and weak Ebitda margin of 5%.

Margin was impacted from one time provision and adjusted Ebitda margin stood at 8% (in-line with estimate). However, due to expectation of lower execution at +15% in FY24E versus earlier of 20-25% and uptick in margin to double digit only in FY25E, we have lowered EPS estimate by 27%/8% for FY24E/25E.

And target price is revised to Rs 93 (earlier target price Rs 99) and downgrade our rating one notch to 'Hold' given negligible upside.

Ashoka Buildcon has multiple stock catalyst and will be key for stock performance- uptick in margin to double digit, execution pick up which is single digit in Q1 and conclusion of asset sale – National Investment and Infrastructure Fund and 11 hybrid annuity model.

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