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ABL delivered Rev/EBIDTA/APAT miss of 11/15/2%.
Muted Q1 performance
ABL delivered Rev/EBIDTA/APAT miss of 11/15/2%. 1QFY20 order backlog stood at Rs 8,160 crore, excluding Rs 870 crore in Tumkur Shivmoga HAM project where LoA is received. ABL aims to secure new orders worth Rs 4,000-6,000 crore during FY20E.
While 1QFY20 execution was below estimates, robust order book of Rs 9,030 crore shall drive 21.4% revenue CAGR over FY19-21E. ABL maintained base case 25-30% revenue growth (with Rs 3,500-4,000 crore contribution from road projects alone). ABL has guided for core EBITDA margins in the range of 11-12.5%.
Delay in Appointed Dates of balance HAM projects
There continues to be a delay in securing appointed dates for the three packages of Tumkur Shivmoga (Package I, II and IV). For package I and II, about 60% of the land is available in 3H stage. Here appointed date is expected to be received during 2QFY20. For package IV, less than 50% land is currently available in 3H stage hence Appointed Date is expected during 3QFY20. ABL has already invested Rs 200 crore in the form of equity in these projects with balance Rs 265 crore to be infused over FY20/21 (+Rs 0.5bn annually for CGD).
ACL monetization targeted by FY20E end
Macquarie has been appointed investment bankers for the sale of its stake in ACL. “We expect deal could coincide with SBI Macquarie’s and ABL both exiting the platform and is expected to be completed by FY20E,” it said
1QFY20 was a bit of disappointment on execution, delay in receiving Karnataka 3 HAM project Appointed Dates had a role to play. ACL asset monetization is expected by Mar-20 and ABL needs to give SBI Macquarie a minimum Rs 15.3bn exit floor valuation for its 39% stake in the platform. Speedy BOT asset monetization (incl. Macquarie’s exit) would provide financial flexibility to bid for more HAM projects, without increasing leverage. Standalone debt has reduced by Rs 140 crore QoQ to Rs 580 crore. “We maintain a buy rating on the stock. Key risks (1) Delay in SBI Macquarie deal closure; (2) Dip in traffic revenue from BOT projects; (3) Delay in Ads,” the brokerage said.