Ashoka reported 20% decline in Q4FY16 construction revenue led by slow execution on projects due to land possession issues. BOT segment saw 14% toll collection growth, led by Dhankuni-Kharagpur (DKR) project. PNG termination is a positive and reduces cash burn going forward. Order flow is key for Ashoka, having won only Rs 28 billion of road orders in FY16, leading to 2.2x book-to-bill ratio. Maintain ‘buy’.
DKR, which is the most valuable project for Ashoka, saw 17% y-o-y and 12% q-o-q toll collection growth. Management did not attribute this to state elections and expects the pick-up to continue in FY17.
Sambhalpur-Baragarh also saw 16% q-o-q toll collection growth on the back of pickup in mining activity. We expect SBR to see at least 20%+ growth in FY17 on the back of full-commissioning (15%) and traffic growth (5-7%). On the other hand Jaora-Naygaon saw 8% q-o-q decline due to some diversion to NH-3.
PNG termination is a positive as it reduces cash burn of `300 million on an annualised basis. Profit from associates (instead of loss) was the key reason to profit beat on our estimates in Q4FY16.
Ashoka reported 20% y-o-y decline in construction revenues in Q4FY16 due to land acquisition issues in Easternperipheral and JNPT projects. These issues are now resolved and projects started execution from May 16.