Ashoka Buildcon: PAT growth of 156% & revenue growth of 26% for Q1-25 at a PE of 11
Guidance of 20% revenue CAGR for FY24-26 with margin expansion. Sales of HAM & BOT to be completed within a year. Expecting order inflows of Rs 10,000-12,000 cr for FY25
ASHOKA is guiding for 20% revenue FY24-26 CAGR with expanding margins. The asset monetization plan will add to the upside within the next 12 months. For the outlook given by ASHOKA management the valuations are attractive.
2. Construction company
3. FY20-24: PAT CAGR of 34% & Revenue CAGR of 18%
4. FY23: PAT down 52% & Revenue up 35%
5. Strong FY24: PAT up 40% & Revenue up 21% YoY
6. Q1-25: PAT up 156% & Revenue up 26% YoY
7. Business metrics: Weakening return ratios
8. Strong outlook: Revenue growth supported by order book
So as far as revenue is concerned, we should be around 15%, 20% growth.
ii. FY26: Revenue growth of 20%
Around 20%
iii. FY25: Margin improvement in H2-25
we are around in the range of 7% to 8%. And hopefully, for the next 2 quarters, it would be in the same lines. And this is the new order book that is there in the pipeline and which is already where we are L1. We feel that from third and fourth quarter onwards, we should be in the range of around 9% to 10%.
iv. Order book sufficient for FY25 revenue
As on 30 June 2024, our balance order book stands at INR10,356 crores. This is excluding the projects where we are L1 of INR3,434 crores. If we add
that then it becomes INR13,800 crores.
Order inflows should be -- we are already at INR3,400 crores for quarter 1 and would expect signing of the same in coming quarters. So on the same line, we should be having around INR10,000 crores to INR12,000 crores addition in the year.
9. PAT growth of 156% & Revenue growth of 26% in Q1-25 at a PE of 11
10. So Wait and Watch
If I hold the stock then one may continue holding on to ASHOKA
ASHOKA is guiding for a 15-20% growth in FY25, followed up with about 20% revenue growth in FY26 with improving margins.
Order book is sufficient to support the next three quarters of FY25. However, one needs to see order inflow in the next 3 quarters of FY25 or else the FY26 revenue growth guidance will be under threat and could be reason to move out from ASHOKA
Value unlocking by ASHOKA expected within 12 months through Asset Monetization
High likelihood that the sale will be finalized within the following twelve months, these completed projects assets and liabilities continue to be classified as held for sale.
11. Join the ride
If I am looking to enter ASHOKA then
ASHOKA has delivered PAT growth of 156% and revenue growth of 26% in Q1-25 at a PE of 11 which makes the valuations quite attractive in the short term.
The revenue guidance of about 20% CAGR by ASHOKA for FY24-26 with improving margins at a PE of 11 makes the valuations quite attractive from the medium term.
The value unlocking by ASHOKA expected within 12 months through Asset Monetization will add to the upside and makes the valuations at PE of 11 quite attractive.
The risk in the thesis around ASHOKA is around order inflows. With a depleting order book the growth guidance will not be met.
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