­­Established position in EPC, BOT and HAM Road Segments
ABL is engaged in two businesses - EPC business for roads, power distribution, railways and building projects and development of roads and highways on Build, Operate and Transfer (BOT) and Hybrid Annuity Model (HAM) project and through its subsidiary Ashoka Concessions Limited. ABL has an established track record of almost three decades in executing EPC contracts. The company has constructed more than 14,000 lane kilometres of road since its inception. ABL handles EPC contracts for all projects and are responsible for the Operations and Maintenance (O&M) of road projects in ABL and ACL. The company is engaged in modernizing and setting up of power distribution lines for Maharashtra State Electricity Distribution Company, North Bihar Power Distribution Company Limited, Tamil Nadu Electricity Board and CPDCL. The company is also engaged in electrification of railway project with contract from Rail Vikas Nigam Limited, Northeast Frontier Railway, IRCON and Gujrat Rail Infrastructure Development Corp Limited.
Acuité believes that ABL’s established position in the EPC segment of roads, railways, power transmission and distribution along with BOT and HAM project execution capabilities will support its business risk profile over near to medium term.

Diversified order book position
Ashoka Buildcon Limited currently has 9 HAM projects of Rs.1849 Cr., 25 EPC contracts worth Rs.8697 Cr, 11 Power T&D EPC Contracts worth Rs.3618 Cr., 6 railway EPC projects worth Rs.320 Cr., EPC Buildings projects worth Rs. 420 Cr. thus the unexecuted order book stands at Rs. 14,905 Cr. as on 31st March 2025. The company is actively bidding across various segments which will provide higher margins for them, including roads, railways, and power. ABL’s orderbook is geographically diversified with presence across 20 states and overseas markets. Orderbook is well diversified across segments, with roads forming 70%, followed by power T&D at 24%, railways at 2.1%, and building EPC at 2.8%. Acuite believes that the large unexecuted order book provides revenue visibility over the medium term.

Strong performance albiet decline in profitability
ABL achieved revenues of Rs. 7,061.43 Cr. in FY25 as compared to Rs. 7,734.94 Cr. majorly due to slowdown in order execution. The profitability took a hit owing to additional cash outflows with respect to labour cess assessment and higher provisioning for expected credit loss (ECL).  The EBITDA margin stood at 7.74 percent in FY25 as compared to 7.78 percent in FY24 while the PAT margin stood at 2.79 percent in FY25 as compared to 5.72 percent in FY24. Due to absence of any exceptional item(s) in FY25 the profit after tax has reduced significantly to Rs.197.24 Cr. in FY25 as compared to Rs.442.75 Cr. in FY24( the Company had sold its investment in Unison Enviro Private Limited ('UEPL'), a subsidiary of the Company to  Mahanagar Gas Limited (MGL) for a consideration of Rs.286.66 Cr. Accordingly, the Company had recognised the gain on sale of investment of Rs, 216.63 Cr. in the standalone financial results for the year ended March 31, 2024 and disclosed the same as an exceptional item). Acuite believes going forward the company will likely execute higher margin orders with additional order inflow which will improve the revenues and profitability of the company in the medium term.

Moderation in ­Financial Risk profile
The tangible net worth of the company stood at Rs.4,008.95 Cr. in FY25 as compared to Rs.3,812.12 Cr. in FY24 due to accretion to reserves. The company's gearing ratio increased to 0.51 times as of March 31, 2025. The Total Outside Liabilities to Tangible Net Worth (TOL/TNW) ratio increased to 1.32 times as of March 31, 2025, compared to 1.27 times a year earlier, reflecting the rise in debt. Further, the company's debt protection metrics have moderated, with an Interest Coverage Ratio (ICR) of 2.27 times (PY 3.98 times) and a Debt Service Coverage Ratio (DSCR) of 1.63 times (PY 2.71 times) for FY25 adjusted for unsecured loan from wholly owned subsidiaries payable on demand which is clubbed under short term borrowing. The rise in working capital borrowings has contributed to an increase in interest costs, along with lower accruals, has led to moderation in both ICR and DSCR. Acuite believes that these metrices are expected to improve in and after FY26, driven by a planned reduction in external debt from stake sale proceeds and an expected enhancement in profitability.

Intensive working capital cycle
Operations of ABL are working capital intensive on account of the inherent nature of the EPC business and long project execution cycle of 2-3 years. There is high dependence on state and central government authorities for receipt of payments. The working capital management of the company is intensive marked by Gross Current Assets (GCA) of 326 days for FY2025 as compared to 259 days for FY2024. The company’s GCA days have remained on a higher side with ~250-300 days for the last three years ended March 31, 2025, which is largely driven by unbilled revenue and receivables classified as contract assets. For transmission and distribution(T&D) projects, 20% payment is received post operationalizing of projects and 10% is withheld as retention money until the expiry of defect liability period (usually 12 months), leading to long cycle for projects. The inventory days of the company stood at 147 days in FY2025 as compared to 109 days in FY2024. The increase in inventory days is majorly due to increase in contract assets which have increased to Rs.2267.97 Cr. in FY25 from Rs.1699.11 Cr. in FY24. The debtor days stood at 91 days in FY25 against 69 days in FY24. This is generally due to receipt of receivables from government entities which delay in making payments due to which as on year end the debtor days are shown increased. Days payable outstanding stood at 149 days in FY25 against 160 days in FY24. The company has established favorable payment terms with suppliers, allowing for longer payment periods without penalties. Acuite believes that the working capital cycle of ABL will likely remain intensive given the nature of industry it operates in.

Leveraged Capital Structure:
ABL's leverage has increased to 0.51 times in FY25 with total debt increasing to Rs. 2,058.69 Cr. in FY25 from  Rs.1,442.65 Cr. in FY24.The total debt consists of approximately Rs. 650 crore from associates, classified as short-term and long-term based on operational needs, representing cash surpluses upstreamed from 100% owned subsidiaries. Additionally, in October 2024, ABL raised Rs. 300 crore in NCDs for 18 months at a coupon rate of ~9.45%, with repayments scheduled in three tranches one week before maturity in April 2026. Acuite is of the opinion that ABL relies on monetization from its BOT and HAM projects to ease repayment pressures. However, cash flow fungibility through its SPV structure will enable the company to meet obligations in case of any liquidity challenges.

Exposure of ABL to timely execution of EPC contracts and to risks associated with BOT projects
ABL is exposed to risks such as delays in receipt of approvals in the infrastructure segment, which may impact operational cash flows. The timely flow of orders and their execution are critical to the maintenance of a steady revenue growth. ABL is also required to support the projects till the projects reach optimal utilization. The cash flows of a toll-based project are dependent on traffic volumes, which in turn are largely influenced by the level of economic activity in and around the area of operation. In the event of a project’s cash flows being insufficient to meet its debt servicing commitments/maintenance commitments, the support would be required to be extended from either ABL or ACL. 70% of ABL's order book as on 31st March 2025,comprises of roads projects across various modes (BOT/EPC/HAM) which keeps it susceptible to changes in government regulations, economic conditions, intense competition and cyclicality inherent in the construction industry.