ASHOKA - Ashoka Buildcon Limited Share Price

Ashoka Buildcon Limited's management provided a positive outlook for FY '26, targeting a revenue growth of 10% to 12%. They anticipate achieving around INR 10,000 to INR 12,000 crores in order inflows from a mix of projects across roads, railways, and power sectors.

Key points highlighted include:

1. The company is benefiting from the National Highways Authority of India (NHAI) aiming to roll out approximately INR 1.5 lakh crores worth of projects, with current visibility at around INR 75,000 crores.

2. The management expects to catch up on execution in Q3 and Q4 after facing delays in Q1 due to early monsoons and mobilization stages of new projects.

3. Significant cash inflows are anticipated from the monetization of assets, including approximately INR 2,800 to 3,000 crores from 5 BOT projects and around INR 1,100 crores from 5 HAM projects, expected to be completed by September 30, 2025.

4. The company's order book stands at INR 15,886 crores, with an emphasis on maintaining diverse sectors such as roads (65.7%) and power transmission (31.4%).

5. Financially, Q1 FY '26 saw total income at INR 1,339 crores, down 30% year-on-year, while EBITDA improved by 4% to INR 151 crores, with a margin increase of 370 bps to 11.3%. Net profits declined by 25% to INR 31 crores.

6. Innovation in traffic management through intelligent systems is also on the agenda, with revenues expected from incident management.

In summary, the management remains optimistic about growth potentials and project execution, strategically intending to reduce debt significantly post-monetization, while still navigating competitive bidding landscapes.

Q1 FY'26 Earnings Call: Key Questions and Answers

1. Question: What is leading to muted order execution this quarter given the 30% revenue decline and a 15% growth in the order book?
   Answer: There are a couple of reasons behind this. Primarily, the early onset of the monsoon has affected our execution. Moreover, while we received seven new projects, only three have advanced thus far, with four still in mobilization. This lag has directly contributed to the decline in our Q1 turnover.

2. Question: What growth can we expect in execution for FY'26?
   Answer: We anticipate about 10% growth overall for the fiscal year. Q1 and Q2 may be slightly subdued, but we plan to ramp up in Q3 and Q4, where we expect all projects to operate at full capacity.

3. Question: How is the NHAI project pipeline looking, especially with the government's goal of INR1.5 lakh crore?
   Answer: Currently, we see a visibility of around INR75,000 crores in the NHAI pipeline, with plans to ramp it up to INR1.5 lakh crores. Historically, NHAI has achieved 80-90% of their announcements, so we're optimistic about this potential.

4. Question: Can you provide guidance for FY'26 regarding revenue and order inflow?
   Answer: We expect to secure orders worth INR10,000 to INR12,000 crores this year, with quarterly targets around INR3,000 crores moving forward. We also anticipate a revenue growth of 10-12%.

5. Question: What is the expected timeline for the monetization of BOT and HAM assets?
   Answer: We expect to close the sale of five BOT projects by September 30, 2025. The first five HAM projects should close by late August or early September. This includes unlocking significant cash flows for our commitments.

6. Question: What is the expected cash inflow from the monetization of these assets?
   Answer: For the first five BOT projects, we estimate inflows of around INR2,800 to INR3,000 crores. The first set of HAM projects is expected to generate about INR1,000 crores. The proceeds will primarily be used to pay off debts.

7. Question: Can you elaborate on revenue sources from the intelligent traffic management system?
   Answer: Revenue will primarily derive from incident management, including fines for speeding, seatbelt enforcement, and other infractions managed via cameras installed along highways. We anticipate significant income while sharing profits with the government above a capped IRR of 18%.

8. Question: What is the anticipated impact of project cancellations on your order book?
   Answer: A significant project was withdrawn by the court, impacting our order book with a value of INR850 crores. While this project is off our books, we expect opportunities for rebidding in the future.

9. Question: What are the capital expenditure plans for the year?
   Answer: Our capex for Q1 was INR23 crores, with a total expected capex of approximately INR125 crores for the full year, focused on completing ongoing projects and new ventures.

10. Question: What is the impact of cash influx post-monetization on your debt levels?

Answer: Post-monetization, we aim to reduce our standalone debt from INR1,600 crores to around INR500-600 crores, significantly improving our balance sheet. Total project-level debt will also decrease considerably, leaving us with a clean slate for future investments.