Ashoka Buildcon Limited (ASHOKA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ashoka Buildcon Q1 FY '27 Earnings Conference Call hosted by IIFL Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mudit Bhandari from IIFL Capital. Thank you, and over to you, sir.

Thank you so much. Good afternoon, everybody. On behalf of IIFL Capital, I welcome you all to first quarter FY '27 earnings conference call of Ashoka Buildcon Limited. From the management, we have Mr. Satish Parakh, Managing Director; and Mr. Paresh Mehta, Chief Financial Officer. With this I would request Satish sir to start with his opening comments, and then we can open the floor for question and answer. Thank you, and over to you, sir.

Thank you, Mudit. Good afternoon, everyone. A very warm welcome to all of you joining us for Ashoka Buildcon earnings conference call for the quarter ended 30 June 2026. Joining me on today's call are our CFO, Mr. Paresh Mehta, along with our Investor Relations adviser from SGA. I hope everyone has had the opportunity to review our financial results and investor presentation, which have been uploaded on the stock exchanges and the company's website. Let me give -- let me begin by giving you a brief perspective on industry environment and then take you through some of the key developments of Ashoka during the quarter. Q1 FY '27 has started on a mixed note for infrastructure sector. On one hand, the domestic highway awarding environment continues to remain subdued. On the other hand, we are seeing encouraging opportunities emerging in the areas of railways, power transmission, distribution and international infrastructure. In the highway segment, the pace of fresh awarding continues to be below the levels we have seen historically. NHAI awarded only around 5 kilometers of projects in June compared with 102 kilometers in May. While construction activity in June declined 32% year-on-year to around 274 kilometers. For the first 2 months of FY '27 construction stood at approximately 638 kilometers, which is around 34% lower year-on-year. So while we remain positive on the long-term fundamentals of India's road infrastructure, we believe the sector is currently going through a period, where the focus is shifting from simply awarding more kilometers to ensuring that projects are properly appraised, land is made available and execution can proceed efficiently. Part of this makes diversification particularly important. At the same time, the medium- to long-term opportunities in infrastructure remains strong. The Indian budget has provided a significant push to the railway sector with a record capital expenditure allocation of approximately INR 2.93 lakh crores. The government has also announced 7 new high-speed rail corridors covering around 4,000 kilometers with an estimated investment potential of INR 16 lakh crores, along with 2,052 kilometers dedicated freight corridor between Dankuni and Surat. This is important because the opportunity in railways is no longer limited to traditional track construction. It increasingly spans over electrification, signaling, safety systems, freight infrastructure, station development and other specialized EPC requirements. For Ashoka, this creates an opportunity to leverage our existing execution capabilities and participate in infrastructure spending beyond the traditional road segment. The power transmission and distribution segment is another area, where we see long structural growth. India is adding renewable energy capacity at a rapid pace, but the success of this transition depends equally on the ability to evacuate and transmit that power to consumption centers. This is driving significant investment into state transmission systems and energy corridors. Let me now highlight key business developments for Q4 FY '26. Q1 FY '27 was marked by international and non-road wins, while domestic road awarding stayed muted. We believe this is an important development because it demonstrate that our diversification strategy is beginning to provide us with alternative avenues for growth, while the domestic highway cycle remains subdued. In Guyana, we received a letter of award from Central Housing and Planning Authority for the 4 laning of Versailles-Parika Highway in Region 3. The project is valued at USD 35.42 million, around INR 328 crores. This award is particularly encouraging because it further strengthens our international road infrastructure portfolio in the South America. In Chhattisgarh, our joint venture received a letter of award from Chhattisgarh State Industrial Development Corporation for the development of Gems and Jewelry Park in Raipur under the PPP mode. The project involves a premium of approximately INR 112.4 crores with Ashoka holding 51% stake in the joint venture. The project has a 5-year construction period and a 30-year lease extendable to 90 years. What makes this project strategically relevant is that it represents our entry into industrial park development and therefore adds another vertical to our infrastructure portfolio. As a part of a portfolio streamlining, we diluted our stake in Ashoka Purestudy Technologies Private Limited from 59% to 39.33% pursuant to a preferential allotment resulting in a classification from subsidiary to an associate company. Coming to the order book status, the company received 2 new project orders as discussed from Central Housing and Planning Authority Republic of Guyana INR 328 crores in Chhattisgarh State Development Corporation, Gems and Jewelry Park of INR 450 crores. As on 30th June, our order book stands at INR 15,251 crores, excluding order received after 30 June, that is INR 450 crores. The breakup of the order book is road and railway comprised of around INR 9,648 crores, which is 63.3% of the order book. Among the road order book, HAM projects are to the tune of INR 1,500 crores. And EPC is worth around INR 6,780 crores and railway is around INR 1,346 crores. Power T&D accounts for around INR 5,066 crores, which is approximately 23.2% of the total order book. The building EPC segment is INR 536 crores, which is 3.5% of the total order book. With this, I would now request Mr. Paresh Mehta, CFO, to present the financial performance. Thank you.

Thank you, sir. Good afternoon, everybody. Starting with the standalone numbers. For Q1 FY '27, total income stood at INR 1,320 crores as compared to INR 1,339 crores in Q1 FY '26, flat year-on-year. EBITDA for the quarter stood at INR 126 crores down to 17% Y-on-Y with EBITDA margin of 9.5%. Profit after tax stood at INR 31.5 crores against INR 30.6 crores during FY '26 Q1, up 3% Y-on-Y. Our revenue contribution for each segment for Q1 FY '27 is as follows; Road EPC contributed 49.3%, Road HAM contributed 10.2%, Power T&D contributed 18.4%, railway stood at 11.5% and other segments like building EPC and others contributed to 10.7%. Coming to consolidated numbers. Total income for Q1 FY '27 stood at INR 1,534 crores as compared to INR 1,937 crores in Q1 FY '26, this is seeing a 21% degrowth largely contributed by sale of monetization of BOT and HAM projects in the last Q3 FY '26. EBITDA for the quarter stood at INR 292 crores, down 55% year-on-year with EBITDA margin at 19%, again contributed by -- due to monetization of HAM and BOT assets. Profit after tax stood at INR 127 crores during Q1 FY '27. In Q1 FY '27, our BOT division, the company recorded a gross total toll collection from Jaora-Nayagaon road project of INR 75 crores, up by 8% year-on-year. With this, we now open the floor for question and answers. Thank you.

[Operator Instructions] Will take the first question from the line of Aditya Sahu from HDFC Securities Limited.

I had a few queries and data points, if you can help me with. This is pertaining to the bid pipeline. How much -- what would be the bid pipeline that we have right now? And if you can throw some light on where are we sort of bidding the projects considering that road awarding has been next to nothing. So if you can throw some light on which sectors and what is the amount of bid pipeline?

So if we see the bid pipeline, NHAI and MoRTH alone is throwing up around INR 1 lakh crores of bid that to be coming in. And if we see states then about INR 25,000 crores bids are on the pipeline. Other than this, railways is there, which is throwing around INR 50,000 crores of bids, which are already now under pipeline. Other than this, power T&D and renewable energy sector are there where we are also bidding for EPC.

Okay. So I mean what would be the value of project that is bidded for right now as on date...

Could you just repeat your question?

The value of projects that we would have bidded as on date?

So wherever we have bid and we have not yet -- bids are not yet open is around INR 8,000 crores.

Okay. Understood, sir. And in terms of the revenue, EBITDA and the order inflow guidance, if you can provide that?

So guidance, we are lowering down from 20% to -- it will be between 10% to 15% because this quarter has been flat due to various reasons and various uncertainties, particularly supply chain. So we feel the overall performance will be able to touch between 10% to 15% growth. And order book provided...

From only 20% I think because you had mentioned the 20% growth. Yes.

Yes, 20% -- and another 5%, yes.

Okay. And on the EBITDA margin front and the order inflow?

Order inflow will be to the tune of INR 6,000 crores through INR 8,000 crores. We have already got INR 800 crores in Q1. We are L1 in around INR 1,800 crores. That will materialize in Q2. And further, we should be able to bag around INR 6,000 crores to INR 8,000 crores in balance 3 quarters.

Okay. Okay. So INR 6,000 crores to INR 8,000 crores.

Q1 has been good in that way. Q1 has been good. INR 780 crores plus L1 in INR 1,800 crores.

And then the margin guidance standard was the same level, 9.5% to 10.5% roughly that we were targeting?

For the year around, probably we will touch that once we ramp up our revenues in the next H2 rather. H1 will continue to remain subdued, but H2 will definitely ramp up and there we'll catch up with 9.5% of EBITDA based on whatever we are spending for the new projects which are taking off, where initial establishment expense is now being incurred, mobilization, then we had ramp up in the H2 and margins also will look better.

Understood, sir. On the HAM equity requirement, how much -- what would be the investment amount that we have done till date? And how much would be the pending contribution on a year-on-year basis?

So for the coming years, for '26-'27, we will have 139 of outlay on the HAM projects including Bowaichandi projects. And for '27-'28 and '28-'29 INR 72 crores each. And investment up to March or rather June, all the HAM projects is to the tune of almost INR 1,280 crores, of which we have already sold 5. So that will get reduced by almost INR 600 crores.

Okay. Understood, sir. We did have the -- so I mean earlier we were targeting on the sale of the 6 SPVs. Our initial plan was, I understand that this was 4 assets by the June quarter and 2 assets by the December quarter. And now I think that we have revised that. So all the assets are being sold by September '26. Is that how the revised timeline looks like and why the revision timeline from June to September?

So as we said, 4 assets, we expect to clear by Q2 revised from Q1, largely because certain compliances to be done for handing over the project to the investors. So that presently there is some delay in handing over. Some compliances we take on but it is on track and we expect that by September end or first part of October definitely we should be able to get the money in.

And that is for all 6 assets you're referring to?

For the 4 assets, the other 2 assets need some time. Because there are -- duty and other compliance to be done at those projects, which will happen by December and maybe Q4, we'll be able to demonstrate the sales.

Understood, sir. And the realization, how much are we realizing from these assets? If you can -- the 4 assets and the 2 assets, respectively, if you can give those numbers?

The total price which was offered by them, when we disclosed was around approximately INR 1,100 crores. And we expect to realize approximately that for a bit of time.

Okay. Pardon, if you could repeat the number?

INR 1,100 crores.

INR 1,100 crores would be for the 4 assets.

For the 6 assets.

For the 6 assets. Okay. And for the 4 assets that we are planning to sell by September?

Approximately INR 700 crores.

[Operator Instructions] We have the next question from the line of Vaibhav Shah from JM Financial.

You mentioned that EBITDA margins would be 9% to 9.5% for the entire year?

Yes.

So we are lowering the guidance?

Yes, by 0.5% because we lost something in this quarter, which will not totally recover for the balance 3 quarter. So we were in the range of around 2 digits at the start of the year. We will be at roughly 0.5% short of that.

Okay. So secondly, margins for other income was 7.2% in first quarter. So any one-offs in the margin? Any provisions or something

No, nothing very significant vis-a-vis as compared to previous year. But largely because we have mobilized a lot of new [indiscernible] employees and other costs for the new verticals where in the initial phase those costs have been loaded in this quarter. So they get rationalized over the coming quarters.

Sir, on the debt side, we have roughly INR 2,100 crores of debt. So partly it is from the subsidiaries. So can you give the breakup of the subsidiary debt and the breakup of interest cost, third-party and what you are paying to subsidiary in 1Q?

So interest cost paid to the subsidiaries is INR 17 crores for this quarter, 1-7. Balance is all third-party interest paid, including NCD ABL, working capital, term loans and equipment loans and also interest on mobilization advance, which is to the employers.

Okay. Sir, once the assets are monetized, then what could be the debt number, at least the third-party debt?

Third-party debt would be approximately in the range of, as we have guided, around INR 500 crores to INR 600 crores.

And what is the amount, right? So we won't be reducing the debt from subsidiaries in future?

So these debt need not be reduced because they are typically free cash flows of our subsidiaries. And they are typically 100% subsidiaries of Ashoka Buildcon. So they may continue to be part of the resources for Ashoka Buildcon. So on the consol level, they will get knocked off. But otherwise, it's not a third-party outflow for the consol.

At stand-alone level it will the interest cost?

Yes, it's a stand-alone cost. It doesn't have a third-party cost.

If you include the third-party debt and the debt from subsidiaries, so maybe post monetization, the debt could be around INR 1,000 crores, including the debt from subsidiary?

Around say INR 1,100 crores, around approximately INR 700 crores would be third-party debt. So around, say, INR 1,200-odd crores.

Okay. And sir, on interest cost side, we have seen reduction to INR 60 crores in this quarter. So incrementally, it will further come down to maybe end the year by around INR 50-odd crores?

Yes, definitely, we expect on 2 counts. One is realization of our WIP working capital receivables and WIP in our power sector, which is due to be collected in the next 2 quarters as well as monetization of assets will typically also reduce debt. Should go below...

Okay. Sir, when are we expecting the for AD for Bowaichandi HAM?

October first week, we should expect appointed date.

So maybe 15%, 20% work only would happen in -- for this year?

This year will be around 15%.

Okay. And sir, when will work start for the newer projects Mithi River, Guyana and Angola?

Mithi has also started now. And Guyana, we are already present, the work is ongoing. Angola will take some time to start, maybe another 2 months.

Okay. And sir, lastly, you mentioned that the total cash flows from monetization will be roughly INR 1,100 crores. So earlier it was INR 1,150 crores. So is that lowering down of the number?

No, it's INR 1,150 crores, just a rounding off.

Okay. And sir, last, the assets which you have already monetized, of that, part amount was pending, some INR 50 crores for BOT and INR 90 crores for HAM. So has that been received now?

No, we are in the process of receiving. We have almost received around 30% of it and balance we are in the process of getting it. It is in process, there are certain compliances which needs to be done to get it done. So we're waiting for that.

And of this INR 1,150 crores, entire would be received this year or part would be stuck?

As I said, maybe by December, the -- by Q3, the 4 assets and by Q4 -- sorry, Q2 and Q4, the balance 2 assets, that's what our target would be.

I mean would there be any holdback amount of INR 1,150 crores?

Didn't get it.

So in the previous 2 deals for 5 BOT and 5 HAM, part amount roughly INR 150 crores was hold back. Which we're expecting to receive the balance portion now. So of INR 1,150 crores, would there be any holdback or the entire money will be received in this year?

So there could be holdbacks, small holdbacks in the range of INR 30 crores, INR 40 crores. I mean that will depend once we get to very close to the transaction. So it's more of compliance, which will be there. So I really cannot pinpoint the number at this moment.

Okay. And sir, lastly, what would be the CapEx for 1Q and the target for FY '27?

So CapEx for this quarter was approximately INR 25 crores, of which INR 7 crores was for our international projects and balance was for domestic. Target, as we said, was approximately INR 125 crores for the whole year.

Margins would be weaker for this year, next year could it be in 10%, 10.5% range for FY '28?

We should expect that projects which are there, typically would throw a margin of 10.5%, 11%. So we should definitely expect margins to improve over a period of time.

[Operator Instructions] We have the next question from the line of Vasudev from Nuvama Wealth.