Ashoka Buildcon Limited — Q3 FY25 earnings call

Call held 11 Feb 2025

Management summary

Ashoka Buildcon reported a mixed Q3 FY25 with standalone revenue degrowth but consolidated EBITDA growth, driven by asset monetization efforts. The company is on track to significantly reduce its debt by March 2025 through the sale of BOT and HAM assets. A robust order book of INR 16,457 crores provides strong revenue visibility, and management projects healthy growth and order inflows for FY26, alongside a strategic focus on diverse EPC opportunities.

Highlights

  • Standalone Total Income for Q3 FY25 was INR 1,816 crores, reflecting a 16% degrowth YoY.

  • Standalone EBITDA margin for Q3 FY25 stood at 10.3%.

  • Consolidated Total Income for Q3 FY25 was INR 2,426 crores, a 10% degrowth YoY.

  • Consolidated EBITDA for Q3 FY25 grew 6% YoY to INR 677 crores.

  • The total order book as of December 31, 2024, stood at INR 16,457 crores.

  • The company expects to offload approximately INR 4,000 crores of debt by March 2025 through asset monetization.

  • Guidance for FY26 includes 10-15% revenue growth and INR 12,000-14,000 crores in order inflows.

  • Ashoka Buildcon is strategically pivoting to be a full-range EPC player, while selectively pursuing HAM projects.

Key financials

  1. Standalone Total Income ₹1,816 Cr -16%YoY
  2. Standalone EBITDA ₹187 Cr
  3. Standalone EBITDA Margin 10.3%
  4. Standalone PAT ₹61 Cr
  5. Consolidated Total Income ₹2,426 Cr -10%YoY
  6. Consolidated EBITDA ₹677 Cr +6%YoY
  7. Consolidated PBT ₹307 Cr +62%YoY
  8. Gross Toll Collection (BOT) ₹331 Cr +5%YoY

What they filed

Q1 FY27: revenue down 20.5%, net profit down 44.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,489 2,388 2,694 1,887 1,851 −26%1,827 −23%1,954 −27%1,500 −21%
EBITDA905 639 777 599 585 −35%435 −32%258 −67%258 −57%
Net profit462 662 452 227 91 −80%2,111 +219%147 −67%127 −44%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenue ContributionRevenue
Road EPC57.9%₹1,051 Cr
Road HAM12.4%—
Power EPC23.7%₹471 Cr
Railway2.5%₹169 Cr
Other segments (Building, EPC)3.4%₹45 Cr

Order book

high confidence

Total value

₹16,457 Cr

as of 2024-12-31 quantified

Composition

Mix 3 segments
  • Roads and Railway 74%
  • Power T&D 23%
  • Building EPC 3%

Share of order book by segment

Pipeline

qualified rfp

NHAI, MoRTH, NHIDCL projects of 3,400 kilometers in pipeline

The company's primary focus remains on maintaining a sustainable EPC business across highways, railways, power transmission and distribution, and buildings.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹125 Cr
    Around INR125 crores in total.
  • Debt Debt disclosed
    • Repayment Expected debt reduction on console basis by March 2025 from asset sales. ₹4,000 Cr
    Total consolidated debt as of 31st December 2024 stood at INR6,847 crores. The standalone debt is at INR1,466 crores, which comprises of INR107 crores of equipment term loan, INR1,059 crores of working capital loan and NCDs of INR300 crores.
  • M&A 5 BOT subsidiaries Divestment · Signed · Consideration ₹[object Object] (undisclosed)

    Asset monetization and debt reduction

    Aggregate enterprise value of INR 5,718 crores, translating into an equity value of INR 2,539 crores.

    Ashoka Concessions Limited, a subsidiary of the company has entered into share purchase agreements with Indian Highways Concessions Trust inter alia for divestment of its 5 subsidiaries. The aggregate enterprise value of the transaction is INR5,718 crores, subject to adjustments for cash and debt translating into an equity value of INR2,539 crores.
  • M&A Several HAM project subsidiaries Divestment · Signed · Consideration ₹[object Object] (undisclosed)

    Asset monetization and debt reduction

    Aggregate consideration of INR 2,324 crores.

    Another development is Ashoka Buildcon Limited and subsidiary, Ashoka Concessions Limited have entered into agreements to sell their stake in several HAM project subsidiaries for an aggregate consideration of INR2,324 crores.
  • M&A 34% stake of ACL from SBI Macquarie Acquisition · Signed · Consideration ₹[object Object] (undisclosed)

    To make ACL a wholly owned subsidiary

    Post-acquisition of ACL Securities held by investors, ACL would become wholly owned subsidiary of the company.

    The company will acquire 34% stake of equity of ACL from SBI Macquarie Infrastructure Investments Pte Limited and SBI Macquarie Infrastructure Trust for INR1,526 crores.
  • Liquidity Liquidity disclosed Expected to have substantial cash on books and potentially be net cash by FY26 post asset monetization.
    Okay. Okay. So going forward in FY '26 and, say, March 2027, what would be the balance sheet look like, like the cash debt on the consol level? ... Should be substantially low, substantially low. ... But still even then also, it should not be -- it should be substantial cash on books. ... We can say we can be net cash by FY '26, we can... Right.

Guidance & targets

Revenue

  • FY25 Revenue Growth Revenue · FY25 · Medium confidence Flattish or 2-3% decline
    We'll try to achieve the last year numbers, but it could be short achieved by about 2% or 3%. I'm not sure. We'll just see by how the year ends, a couple of next 2 months ends.

    — Paresh Mehta

  • FY26 Revenue Growth Revenue · FY26 · High confidence 10-15%
    So for FY '26, we expect based on the order book received in the last quarter and expected orders in the coming quarters, we expect at least 10% to 15% growth in the revenues over '25

    — Paresh Mehta

Profitability

  • Q4 FY25 EBITDA Margin Profitability · Q4 FY25 · Medium confidence Closer to 9%
    Yes. For Q4, we try to achieve the same margins of Q3. Overall mix would be in the range of 8.5%.

    — Paresh Mehta

  • FY26 Margins Profitability · FY26 · High confidence 10-11%
    with the margins to the tune of 10% to 11%.

    — Paresh Mehta

Order Inflow

  • FY26 Order Inflow Order Inflow · FY26 · High confidence INR 12,000-14,000 crores
    Order inflow guidance would be in the range of INR12,000 crores to INR14,000 crores.

    — Paresh Mehta

  • Q4 FY25 Order Inflow Order Inflow · Q4 FY25 · Medium confidence INR 3,000-4,000 crores
    Balance of the quarter, expect INR3,000 crores to INR4,000 crores, we should be able to looking at the bidding pipeline, tenders which we already bid and not opened. And maybe this March end should throw up a good amount of bidding. So we're expecting around yes, around INR3,000 crores we should do.

    — Satish Parakh

Capex

  • FY26 Capex Capex · FY26 · High confidence INR 125 crores
    Around INR125 crores in total.

    — Paresh Mehta

Debt

  • Consolidated Debt Reduction Debt · by March 2025 · High confidence INR 4,000 crores
    So we should see approximately INR4,000 crores of debt to go out of the books by March on a console basis.

    — Paresh Mehta

Balance Sheet

  • Net Cash Position Balance Sheet · by FY26 · Medium confidence Potentially net cash
    We can say we can be net cash by FY '26, we can... Right.

    — Paresh Mehta

What to watch in Q4 FY25

Completion of 5 BOT assets monetization

by March 31, 2025
Current Advanced stage, some NHAI NOCs received, 60-70% bank consent
Target Transition concluded

Why it matters

This is a major asset sale crucial for the company's debt reduction and capital restructuring plans.

So we expect to get the transition concluded by 31st March. We are at a very advanced stage, a few of the NOCs have already coming from NHAI. We are waiting for a couple of more. On the banks also, almost 60-70% banks have already given their consent NOC for change of ownership. So we are trying to achieve the timelines and close it by March '25.

Risks & concerns

  • Stock market sentiment affecting sector valuation

    medium

    Analyst noted 25% stock value drop in 45 days, questioning underlying sector issues. Management attributed it to public sentiment and government, not fundamental problems, stating sector opportunity remains buoyant.

    Analyst downplayed

  • Delays in land acquisition and regulatory approvals for new HAM projects

    medium

    For the new HAM project, 3D has been done for 283 out of 293 hectares, but 3G is in process, requiring 3-4 months for land clearance, potentially delaying the appointed date to September.

    Management acknowledged

  • Uncertainty regarding Jaora-Nayagaon project monetization

    medium

    The long stop date for the NIIF deal has passed, and the company is not in active discussion for its acquisition. Efforts are ongoing to secure NOC from MPRDC for transferring 26% shares.

    Management acknowledged

Q&A highlights

5 direct
Order pipeline for NHAI, MoRTH, NHIDCL projects Direct
Yes. So NHAI is now coming up with projects of 3,400 kilometers, which are already announced. That is NHAI plus MoRTH plus NHIDCL, amounting to around INR1,11,000 crores. So these are projects which are in pipeline now.

Provides significant visibility on future bidding opportunities and potential order inflows for the company.

Asked by Jainam Jain

Guidance for FY26 revenue growth, margins, and order inflow Direct
So for FY '26, we expect based on the order book received in the last quarter and expected orders in the coming quarters, we expect at least 10% to 15% growth in the revenues over '25 with the margins to the tune of 10% to 11%. ... Order inflow guidance would be in the range of INR12,000 crores to INR14,000 crores.

Crucial for investor modeling and understanding management's outlook on the company's performance for the next fiscal year.

Asked by Jainam Jain

Debt reduction plan post asset sales and future balance sheet outlook Direct
So by the end of the year, approximately INR2,000 crores of -- INR2,500 crores of debt on the BOT projects will go off the books. ... So we should see approximately INR4,000 crores of debt to go out of the books by March on a console basis. ... So what we have told is we'll receive approximately INR2,500 crores from sale of our BOT projects, which will be split into INR1,750 crores in one stage and balance INR750 crores in the next stage and INR2,300 crores in the HAM projects. ... We can say we can be net cash by FY '26, we can...

Addresses a key concern for construction companies regarding debt levels and provides a clear roadmap for deleveraging and improving the balance sheet to a potentially net cash position.

Asked by Sahil Jain

Status of 11 HAM projects monetization and lender approvals Partial
So in the 11 HAM projects which we have, almost 70% of our assets we have got in principle ok from NHAI. And lenders also almost 50% NOC has come. So we are targeting offloading of certain HAM projects by 31st March.

Provides an update on the progress of asset monetization, which is critical for debt reduction and capital reallocation, but indicates some approvals are still pending.

Asked by Bhavin Modi

Status and timeline for monetization of 5 BOT assets Direct
So we expect to get the transition concluded by 31st March. We are at a very advanced stage, a few of the NOCs have already coming from NHAI. We are waiting for a couple of more. On the banks also, almost 60-70% banks have already given their consent NOC for change of ownership. So we are trying to achieve the timelines and close it by March '25.

Confirms the expected timeline for a major asset sale, which is a significant event for the company's financial restructuring.

Asked by Bhavin Modi

Green hydrogen project details and capabilities Partial
So this is an MOU entered with the Bihar government, wherein they are supposed to provide us a land for putting up the entire project. The green hydrogen project is basically a project powered by solar power, by renewable energy. ... So this is what basically we need to build over the period. And green power, solar, we have enough capability and understanding of solar business.

Reveals a new strategic initiative in green energy, indicating potential diversification, though it's in an early stage and requires building new capabilities.

Asked by Dr. Amit Vora

Impact of unbilled revenue and debtors on interest cost Direct
Vis-a-vis the cost of finance going up, definitely money in unbilled revenue and debtors continues to be a bit high in the last quarter also over and above September, which we expect to get all cleared by March end.

Explains the reason for increased interest costs and provides a timeline for resolution, which could improve profitability in the next quarter.

Asked by Vaibhav Shah

2 min read 5 chapters

Detailed narrative

Strategic Asset Monetization and Debt Reduction

Ashoka Buildcon is actively pursuing significant asset monetization, with agreements in place to divest 5 BOT subsidiaries for an equity value of INR 2,539 crores and several HAM project subsidiaries for an aggregate consideration of INR 2,324 crores. The company anticipates concluding the transition for the 5 BOT assets by March 31, 2025, and offloading certain HAM projects by the same date. These initiatives are expected to reduce consolidated debt by approximately INR 4,000 crores by March 2025, with management projecting a substantially low debt and potentially net cash position by FY26.

Robust Order Book and Future Pipeline

As of December 31, 2024, Ashoka Buildcon's total order book stood at INR 16,457 crores, with Roads and Railway projects comprising 74% (INR 14,000 crores) and Power T&D accounting for 23% (INR 3,796 crores). The company has already secured INR 9,000 crores in order inflows year-to-date for 9M FY25 and expects an additional INR 3,000-4,000 crores by the end of Q4 FY25. A strong pipeline of INR 1,11,000 crores in NHAI, MoRTH, and NHIDCL projects provides significant future bidding opportunities.

Financial Performance and FY26 Outlook

For Q3 FY25, standalone total income was INR 1,816 crores (down 16% YoY), with an EBITDA margin of 10.3%. Consolidated total income was INR 2,426 crores (down 10% YoY), but consolidated EBITDA grew 6% YoY to INR 677 crores, and PBT surged 62% YoY to INR 307 crores. Management expects FY25 revenue to be flattish or decline by 2-3% YoY. For FY26, the company guides for 10-15% revenue growth with margins in the 10-11% range, and order inflows of INR 12,000-14,000 crores.

Diversification into Green Hydrogen

Ashoka Buildcon has entered into an MOU with the Bihar government for a green hydrogen project, which will be powered by solar and renewable energy. This initiative is currently in its inception stage and will be developed under a subsidiary of Ashoka Buildcon. While the company acknowledges the need to build capabilities over time for this new area, it leverages its existing expertise in solar business.

Project Execution and Operational Updates

The company received provisional completion certificates for 39.07 km out of 40.6 km for the Ashoka Baswantpur Singnodi Road Private Limited SPV. Key project awards include INR 2,309 crores from MSRDC, INR 1,126 crores from BMC, INR 1,737 crores from MMRDA, and INR 1,391 crores for an NHAI HAM project. Execution of the Bangalore International Airport Limited EPC project (INR 1,055 crores) has commenced and is in full swing.

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