Ashoka Buildcon Limited ($ASHOKA)

Ladies and gentlemen, good day, and welcome to Ashoka Buildcon Limited Q4 FY '26 Earnings Conference Call, hosted by Anand Rathi Share and Stock Brokers. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Bhavin Modi from Anand Rathi Shares and Stock Brokers. Thank you, and over to you, sir.

Hello, everyone. On behalf of Anand Rathi International Equities, I extend a warm welcome to the Ashoka Buildcon Limited Q4 FY '26 Earnings Conference Call. We are pleased to have with us today Mr. Satish Parakh, MD; and Mr. Paresh Mehta, CFO. So without further delay, I invite Mr. Satish to share his opening remarks, following which we will open the floor for Q&A session. Over to you, sir.

Thank you, Bhavin. Good afternoon, everyone, and a very warm welcome to all of you joining us in Ashoka Buildcon Limited's earnings conference call for the quarter and financial year ended 31st March 2026. I appreciate your continued...

Your voice is breaking, sir.

I appreciate your continued time, interest and engagement with the company. Joining me on today's call is Paresh Mehta, CFO, following with our Investor Relations adviser from FY '26 has been a transition year for infrastructure sector. Over the past few years, the delay witnessed aggressive expansion or awarding activities and rapid auto growth. However, FY'26 market share in focus towards execution quality, financial discipline, monetization and sustainable. On activity was lower than anticipated. Several projects and delays in clearances and land availability and execution momentum across the industry was impacted. In addition, Q4 '26 has characterized by challenging global macroeconomic environment, including geopolitical tensions, implementory pressures, supply chain uncertainties and elevated input cost rising prices of key materials such as cement, bitumen steel, fuel, along with labor shortages in certain regions, further impacted the execution pace across the projects. The Indian relevance and infrastructure sector continues to undergo a structural transition with an increasing focus on quality led capital efficient and color development rather than volume led expansion. The Ministry of Road Transport and Highways, and [indiscernible] aligning the project pipeline towards expressway access control corridors and logistic efficiency movements rather than kilometer based amount. The sector is broadly targeting 11,000 kilometers of highways by FY '27 and 15,000 by FY [ '32. ] Looking ahead at FY '27. The outlook for the highway sector remains constructive despite some moderation in physical execution piece. Road construction is expected to be in the range of 9,000 to 9,000 kilometers during the year. The government is also targeting approximately INR 75 crores, [indiscernible] of projects under the [indiscernible] in FY '27, reflecting a renewed push towards private capital participation in road infrastructure. In railway, the government has outlined a long-term capital expenditure plan nearly INR 12 crores to INR 13 lakh crores by 2030. Focused on dedicated threat color electrification, safety system station modernization and high-speed rail projects. In parts of Transmission segment, significant investment towards renewable energy, integration and green energy corridors are expected to create a large long-duration EPC opportunity pipeline. Overall capital expenditure in road sector is budgeted at approximately [ 2.93 trillion ] for FY '27 representing an increase of 8% year-on-year. Let me now highlight some key business developments during the quarter. During Q4, we secured several important project wins across geographies and sectors, which continue to reinforce execution capability and client confidence in Ashoka Buildcon. One of the most significant development was a receipt of letter of award in Kingdom of Saudi Arabia through our wholly owned subsidiary in a joint venture. The project pertains to construction works for Diriyah One Hotel package with a total value of INR 1,800 crores, in which our share of the project is INR 900 crores. This marks an important milestone in standing our international EPC footprint particularly in the Middle East. We also received a contract acceptance from the Ministry of Water and Energy. Angola for rehabilitation, our distribution network value at USD 72 million, which is approximately [ INR 690 crores ], further expanding our international R&D portfolio. Additionally, we secured a road relation project in Liberia valued at around INR 430 crores, which is USD 45 million, continuing our growing presence in international road infrastructure, particularly across African markets. In India, we received a letter of award from Bihar Rajya Pul Nirman Nigam for construction of a major bridge across River Gandak and on an increasing basis, the total project value approximately is INR 474 crores, with a [ sopa ] share of INR 242 crores. In our Tumkur Shivamogga portfolio in Karnataka, where provision CDs were achieved across multiple stages, improving annuity visibility and strengthen medium-term cash flows. Under a notable development was the reaffirmation of our credit ratings from acute ratings. The company's long-term rating is reaffirmed at AA stable while short-term rating removed from A1+. On the asset monetization front, we continued progress on the sale of remaining 6 HAM SPVs. The expected completion time line has now been extended to June 2026, subject to fulfillment of condition precedent. Coming to order book status. The company has received 4 new projects, orders and LOA, as discussed above, the Diriyah Company, Kingdom of Saudi Arabia viz Ashoka Buildcon, Public Works Department, Liberia, Ministry of Energy and Water, the Republic of Angola and LOA from [ IGR ]. As on 31st March 2026. Our balance order book stands at INR 15,312 crores. This is excluding orders received for 31st March of INR 681 crores of Angola. The breakup of [ alder's roads ] and delay projects comprise around [ INR 10,123 ] crores which is 66% of the total order book. Among the road payer order book and projects at with [ euro ] [ INR 1,619 ] crores and EPC road project are INR 7,084 crores and railway is around [ INR 1,420 crores ]. Partly in the accounts for around INR 4,637 crores, which is approximately 30% of the total order book. The total Building segment order book is of INR 562 crores, which is the entire order book. The order book continues to remain diversified across key segments, including roads, highways, railways, power transmission distribution and uber infrastructure projects, domestic and globally. I will now request Paresh Mehta, CFO, to present the financial performance. Thank you.

Good afternoon, everyone. Starting off with the stand-alone numbers for Q4 FY '26, total income stood at INR 1,819 crores. as compared to INR 2,012 crores in Q4 FY '25, a degrowth of 10%. EBITDA for the quarter stood at INR 168 crores, down by 7% Y-o-Y, with EBITDA margins of 9.2% and improvement by 20 bps year-on-year. Profit before tax, before exceptional items stood at INR 75 crores. PAT stood at INR 49 crores against INR 60 crores for Q4 FY '25. Our revenue contribution for each segment of Q4 FY '26 is as follows, road EPC contributed to 50% Road HAM contributed 10%. Power T&D contributed 18%, Railway stood at 8% and other segments like building EPC and other contributed to 13%. Now for the whole year FY '26, total income for the year stood at INR 5,952 crores as compared to INR 7,188 crores for FY '25 a degrowth of 17%. EBITDA for FY '26 stood at INR 636 crores, down by 6% Y-o-Y with EBITDA margins of INR 10.7 crores, an improvement of 1.3% year-on-year. Profit before tax before exceptional items stood at INR 226 crores and PAT stood at INR 320 crores. Coming to the consolidated figures. Total income for Q4 FY '26 stood at INR 1,992 crores as compared to INR 2,755 crores in Q4 FY '25. EBITDA for the quarter stood at INR 302 crores with EBITDA margins of 15.1%. Profit before tax before exceptional items stood at INR 172 crores and PAT stood at INR 147 crores during Q4 FY '26. For FY '26 -- the FY '26 has been a year of transition, execution focus and strategic consolidation. Revenues were impacted by project mix monetization activities and completion of certain projects. However, we strengthened our balance sheet, diversified order inflows and expanded our presence across domestic and international markets. During FY '26, the company successfully monetized HAM and BOT projects, generating value and improving capital efficiency. Total consolidated debt as on 31 March 2026, stood at INR 2,778 crores. And the stand-alone debt is at INR 1,127 crores. which comprises of INR 70 crores of equipment loan, INR 300 crores of NCDs and INR 757 crores of working capital. In Q4 FY '26, in our BOT division, the company recorded a gross total collection of INR 76.9 crores from Jaora-Nayagaon Road Company. As against INR 664 crores in Q4 FY '25, recording a growth of 16% year-on-year. With this, we now open the floor for question and answers. Thank you.

[Operator Instructions] First question is from the line of Vaibhav Shah from JM Financial.

So firstly, in clarification, this hotel order of Saudi and Mumbai intelligence and traffic management system order -- when have we recorded that in the order book slide that you have provided? The breakup on...

This being executed in the SPVs. So they're not direct IPL orders. This will be over and above INR 15,312 crores.

Both the orders?

Both the orders, yes, they will be [ excluded ] at SPV level. So at the console, they will be captured, but stand-alone AB level, they are not direct orders executed by ABL directly.

So we won't be doing the EPC work, so it won't be in the sale and books.

Will be done by our subsidiary.

Okay. So it won't reflect...

In the tender.

Okay. So both that Mumbai order as well and Saudi total order as well? Both won't be there in the stand-alone books.

Exactly. The console will be added.

Okay. Sir, secondly, on -- we have seen quite weak execution in FY '26. How do you see execution and margins in FY '27? And in 4Q, what was the reason for such weak margin at EBITDA level?

So execution-wise, next year, we should improve by 20%. Order book is also to get around to [ 8% ] this year. And there has been plan on margin due to prolonged in works. And overall, [indiscernible] has also affected the fixed cost.

Some disturbers in the sound. So if I got it correctly, revenue guiding for 20% growth in next year and order in INR 8,000 crores, INR 10,000 crores.

Correct.

Okay. Sir, secondly, on the margin side, what are you guiding for FY '27?

In the past...

Sorry. There is static coming from your line, sir. Yes, sir. Sir, it is not clear. There is some static noice from your line, sir. [Technical Difficulty] Ladies and gentlemen, thank you for patiently holding. We have the line for the management reconnected. Over to you, sir.

Can you hear me?

Yes, sir. Now it is fine.

So for FY '26, our EBITDA margins for the whole year stood at around 8.5% plus. Our estimation for FY '27 is based on the order book which we have, we will be in the range of 9.5% to 10.5% for next year. So we will definitely reach a 2-digit figure for next year.

Okay. Sir, what was the reason for measuring 4Q at 6.9%?

So largely, as we have intended our opening remarks also, the geopolitical situation has bought some pressure on the price situation. So we have considered in our balanced budget increase of around 0.5% to 1% of price escalations. And certainly, we see provisions done at the year-end are contributors to a lower percentage. Otherwise, we continue to maintain 8.5% to 9% EBITDA margin for '26. So that take.

What was the ECL provision in 4Q?

INR 28 crores.

Okay. And sir, lastly, on the working capital side, we have seen quite a bit of stretch in the year-end. So how do you see it going ahead? Last year, we were around 110 days old. This year to exist almost doubled. So how do you see it going forward?

So because these are milestone-based projects a project where we are biting appointed date and ROW clearances. We believe that we should go back to the old downs of 110 to 150 days of -- this is more of a transitory as in the last call also, we had said there was some buildup of receivables in our Power division, which probably by June to -- end of June and September quarter, most of things would get cleared. So we believe that we should go back to normalcy by September.

[Operator Instructions] Next question is from the line of Bhavin Modi from Anand Rathi.

Sir, can you provide us the guidance with respect to what is the targeted order inflow, revenue growth, margins? And what is our base pipeline looking right now? Where we are -- how much amount we have placed the bids? And what are the segments that we are looking for?

So order book guidance, as I said, it is INR 8,000 crores to INR 10,000 crores. And this will be across these sectors roads railways, Power T&D, mainly and this is domestic as well as international. In domestic, we are working for n4 mark at NHIDCL and various states. And to date now, the companies were working in almost segments like railways, water, buildings. So we are very much hopeful of targeting INR 8,000 crores to INR 10,000 crores.

Okay. And sir, what about the revenue growth, what EBITDA margin...

As we have said, we are targeting 20% of revenue growth we are looking at.

Okay. And sir, where do you see this revenue growth coming from? Because if I remove the one HAM project where the [indiscernible] still pending, So we just have only INR 500 crores of backlog, right? And there are only EPCs, I think, were or T&D, right, from where we expect the growth to be coming in?

So entire balance order book of INR 15,300, out of that, whatever portion is targeted for this year, plus whatever new orders we get. This all will contribute to a good revenue growth.

Okay. And sir, one and if I see the order backlog, right, apart only from the 2 or 3 orders, all the order backlog are less than INR 1,000 crores. So can we see because all the places the mobilization must have been done. So do you see there's some amount of diseconomies of scale as the order backlog start shrinking?

Why order book backlog should start seeing? [indiscernible] If you can elaborate a little bit better, yes.

No, my only point is, sir, now the backlog, right, all the individual order backlog, most of them are...

[indiscernible] projects.

There less than INR 1,000 crores, now most of the orders. Can be -- so can that have any impact on the margins?

No, it doesn't have any impact on the margin because margins are completely distributed throughout the project.

Got it. And sir, can you give us the time line with respect to the 6 HAM what are the time lines? And what are the expected concentration?

June is what we are targeting out of at least 4 assets, we will monetize by June end and received for the technologies.

So to continue on that, out of the 6 projects, 4, we are definitely targeting by June, which will typically bring in cash of around INR 750-plus crores and the balance we expect by December, which should be another INR 400 crores.

Next question is from the line of Aditya Sahu from HDFC Securities.

In terms order inflow guidance you have provided to INR 10,000 crores of order inflow in FY '26 -- sorry, '27. However, if you could help me with what would be our bid pipeline as of today?

So if you look at natural project pipeline, we have around INR 40,000 crores or 85 projects to be bid. In addition to this, there are new projects which will be announced in next quarters. is also throwing a lot of opportunities like Bihar.

As and when they come from or bidding that would eventually be added to a bit understood, sir. On the 5 assets each that we have monetized. What sort of inflows have we had at the sort of on the books or not in terms of the cash inflows for the Ham and BOT assets. Combined, if you can help us with that number?

So in the HAM projects, we had an inflow of around INR 1,150 crores. And on the BOT assets, we had an inflow of around INR 1,800 crores.

INR 1800 crores. So these are the combined -- the combined inflows that we have for the 5 and 5.

Yes.

Right I had missed out on the 4 assets that I had mentioned for that just to be monetized by June and by December. Can you -- if you could repeat the number the inflow that we're expecting on the 4 assets and the in December -- under balance out in December?

So the 4 assets, we expect around INR 750-plus crores. On the 2 assets, which would happen by December around INR 400 crores.

Okay. Okay. Understood, sir. Just one thing because I think last time we were sort of planning to get the assets monetize. So our initial brand was 4 assets by March '26. And assets by June '26, which has sort of postpone -- so like what is the holdup over here? And if you help with that.

So this is largely dependent on the COD -- PCODs being received by us from NHAI. So based on the COD, we are targeted when it will be handed over to the buyer.

Understood, sir. Understood. And the HAM investment, I think our current -- we have invested about [ 6 billion ] roughly in the HAM. What would be the balance amount that we are planning to invest in HAM assets and the time line, if you can help me with on a yearly basis, if that should be for...

So on the equity side, the balance investment to be made in the HAM projects is around INR 325 crores of which the last hand project, BOT, which is yet to receive start date, accounted debt, there is an expenditure of INR 225 crores, which will happen in [ 26 27 crores ], [ 27 28 29 73 73 ]. So overall, INR 75 crores for 3 years starting '26, '27 balance approximately INR 100 crores is for the last 2 assets of where certain investments we still pending of around INR 95 crores. For '26, '27, total investment would be around INR 175 crores and [ 27, 28, 75 28, 29, 35 ].

Okay. So INR 175 crores in '27 and '28, INR 75 crores.

Yes. '26, '27, INR 175 crores, '27, '28 INR 75 crores, '28, '29, INR 75 crores.

INR 175 crores, INR 75 crores, INR 75 crores.

Right.

Understood. And I think just one last question over here. In terms of -- because another working capital has sort of seen that increase over here. What sort of receivable days are we seeing in our -- in the sectors that we are operating for example, if you could -- in the Power T&D, and the roughly directories that you're seeing in the Road EPC business that should therefore.

So as I said, we are building around INR 40,000 crores in road EPC for a central level, another 40,000 for the various states. And then other various sectors will be combined together will be [ INR 30,000 to INR 40,000 ]. So more than INR 1 lakh crores of bidding is going to happen out of which mix we are expecting is INR 8,000 crores INR 10,000 crores.

Understood. I was actually referring to the debtor days because no reworking capital has sort. So any flavor on that? What are you seeing on power T&D? What are you seeing on to this.

Yes. So as we said, all these payments are milestone-based. [indiscernible] experience on the power sector is that billing cycle is almost 5 to 7 months. by the time which we get all money almost -- so out of park money of 30% to 40% received in advance, but balance is received after 5 to 7 months. This is the power where we have an order book of around INR 4,600 crores. On the road sector, largely depend on my store based on completion of various stages, but there is monthly billing at state level. So the cycle is around [ 3 to 3.5 ].

Next question is from the line of [indiscernible] from JM Financial.

My first question is what would be our target debt levels by the end of the financial year?

So by the end of financial year, today, as of March '26, our working capital debt is INR 1,126, less cash of INR [ 150 ] crores. So approximately INR 600 crores. And we believe that debt level between the range of INR 500 crores to INR 600 crores by March end also keeping our most similar kind of turnover with a 20% chunk. So it should not be a problem of maintaining a INR 600 crore debt. Of course, we'll have additional cash inflows of the monetization, which may impact the capital cycle and reduce it further. On the debt side, we have around INR 2,778 of total consolidated debt, of which almost INR 1,600 crores would INR 1,300 crores would not be there as of March '27 because we would have sold those and assets. So we'll be in the range of the project loans would be in the range of as of time or around INR 500 crores to INR 600 crores.

My second question is what would be the tax on the gain from asset sales.

In the range of -- so the rate of -- to capital data 12.5%, but effective tax, which we have paid at ACL level, which 1 is almost mill and at AB level, approximately. INR 20 crores, INR 25 crores -- INR 22 crores, rather.

And the last question, sir, of the completed deals of 5 HAM and 5 BOT assets, when will we get the remainder of the cash?

So there are small -- so there are pullbacks which we expect to receive by between June and July total amounts.

What would be the total amount around?

Approximately INR 130 crores and there are certain default consideration, which is based on ton extension, which could become -- which is approximately INR 550 crores which will come in the next 1 or 2 years' time. This is dependent on NHAI's decision on extension of toll for a couple of our BOT projects.

So that would come in the next 24 months?

Yes we expect by 24 months to 36 months, it should happen once NHAI is a [indiscernible], then we can then the buyer we pay as the amount for the extended period.

Next question is from the line of Vasudev from Nuvama.

For the balance [indiscernible] , can you give me what is the equity that we've invested in these HAM's.

Probably we'll take it offline.

Okay. Sure, sir. And do we have any plans on [indiscernible] sales.

So we do pursue the sale of these 2 assets in the coming 12 to 18 months. And both assets are good assets to be sold and good interest is there from buyers. So we have launched a small process of monetization. As we come to certain stages, we'll keep everybody informed.

Okay. Sure, sir. And lastly, sir, what is the CapEx that we did in Q4 and our target for next year?

Total CapEx for the year was INR 56 crores, of which -- sorry, INR 67 crores, of which Q4 was INR 16 crores.

Okay. And for FY '27, how much CapEx are we planning?

We're planning approximately around INR 100 crores of CapEx, which includes certain CapEx in the international, on the [ international ] projects also.

Next question is from the line of Vishal Periwal from PL Capital.

Sir, on this ECL provision that we [ retain ], it is particularly coming from the delay in payment from which segment for us?

So it's a mix of ECL on inventory as well as debtors. So far since project like [ Babini ], we are waiting for where we started certain mobilization and other expenses. So we are making accounted and then other projects where payments are delayed, and we are in discussion in NHAI and other parties for financial. So it's a mix of inventory and debtors.

[Operator Instructions] Next question is from the line of Vaibhav Shah from JM Financial.

Sir, what would be our ordering into a number for FY '26? Ex of the 2 projects which are not taking in the stand-alone books?

[ 6,600 ].

Is this the EPC value ex of GST?

This is with GST.

Okay. And sir, secondly, when you guide for a double-digit kind of margin for FY '27, so there could be ECL provisions or you've factored in some provisions and then you're guiding for 10% margins. Because this year also, we are looking for a good margin, but there were sizable ECL provisions during the year.

It's an estimated -- this number is not as , but our ECL is included in this for the working of this 10% because there will be stages in -- as payments do come, there would be reversal of EPC also over a period of time. So it's a mix of provisions as well as reversals.

Okay. And sir, lastly, for the 6 remaining had you mentioned that the amount is roughly INR 1,150 crores. So if I understand correctly, the investment was roughly around INR 540 crores in those 6 assets. So gain comes around INR 600 crores. So what could be the tax on that at the ABL level stand-alone?

So these would typically be in the range of 12.5% capital gains tax because there's no set up here and -- we can consider in ACS, there are 3 assets where probably we'll have a carryforward losses. So effective tax on all the put together would be in the range of 6% to 7%.

Next follow-up question is from the line of Bhavin Modi from Anand Rathi.

One second for the confirmation. So which are the order which is considered in the SPV. So the traffic management rate, Idea stands Saudi Arabia and [ Mitie ]. These 4 are considered in the SPV level, right?

No, [indiscernible] river is not considered outside. It is part of our order book because AB will execute it directly, though the order has been received by the but it will get back-to-back contract. In the Saudi Arabia project and the idea, the SPV itself will execute work. So that is out. So Saudi are [indiscernible] networks and [indiscernible] INR 1,100 crores are both outside the books of ABL for consolidation. It we--and then it'll be part of consolidation.

So the traffic management in the midstream, right? So it's in the order book, right? So sir, where it is actually closed? Is it clean the power T&D and others?

Other [indiscernible].

Second, sir, with respect to Bangladesh order, the order book stands at INR 370 crore -- INR 374 crores, which was same as last year. So there is no progress there happening, right?

Work is on at slow pace. The work is on, and we expect to complete the whole order book in the course of time.

Got it. Understood. And sir, last question, there is 1 circular from NHAI, where you mentioned that the companies now leaders, they are now to disclose if there is any casualty in any of the project in the last 2 years, and they become disqualified, so do we have to like realize rate this provision as strictly -- or there is some like a submission going from the road filtration companies with respect to this provision?

Yes, road Federation is discussing with them, and they are coming out with a guideline how they will define the casualties for development and all. It's a catastrophic kind of failure, where structural effect is the failure is due to a structural effect, then only they will take such hard situation.

But they are not clearly defined, right? What is catastrophe costs?

That is what is being getting discussed authorities. within [ HB ] authorities here.

[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.

Thank you, everyone, for joining in this call. And we would update as we have been updating on a regular basis. Thank you very much.

Thank you. On behalf of Anand Rathi Share and Stock Brokers, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.

Thank you.