Road Sector Update Analysis on Ashoka Buildcon, IRB Infra, KNR Constructions & Sadbhav Engineering June, 2015

Transcription

1 Road Sector Update Analysis on Ashoka Buildcon, IRB Infra, KNR Constructions & Sadbhav Engineering June, 2015 Page 1

2 Better sector prospects inevitable Key Sector Thoughts We maintain our positive view on the sector on the back of witnessing significant improvement and activity, like: a) 7,980kms of National Highway projects being awarded in FY15 (3,026kms by NHAI and the rest by MoRTH, other organisations) vis-à-vis only 3,621kms in FY14 (a 120% yoy growth), b) 4,410kms of highways being constructed in FY15 (~12kms/ day) vis-à-vis 4,260kms in FY14, c) Ministry setting itself an ambitious target of achieving road construction of 30kms/ day which would mean tremendous scope for EPC players in the medium term, d) flurry of recent initiatives in the sector - exit to concessionaires from a project after 2 years of COD, one-time fund infusion into languishing road projects (~we estimate ~4,000kms of projects to benefit from this), e) Hybrid Annuity model to execute new EPC projects which would enable low traffic risk to concessionaires and comfort to lenders, and f) emergence of traffic growth drivers - pick-up in MHCV sales which can likely to be a precursor to fleet operators adding new fleet, robust 12% y-o-y growth in coal mining and pickup in cement demand in the eastern region. All this point to an imminent and inevitable turn-around to the road construction and road asset owning sectors. We continue to like well established road EPC contractors followed by asset owners with a good portfolio of road assets and a strong balance sheet to win new projects. Hence we would like to play the EPC ordering opportunity theme through KNR Constructions, Sadbhav Engineering and we continue to like Ashoka Buildcon and Sadbhav Engineering among the asset owners. Ashoka Buildcon: We continue to like the company s ability to fund its plan to win ~Rs. 60bn of BOT Road projects (specifically after the recent capital raise of Rs. 5bn via QIP route); strong EPC revenue visibility (7% CAGR in revenues and PAT for FY15-17E); high potential for traffic upside (portfolio level traffic growth still low at ~4%, and 1% increase in traffic increases our target value for BOT assets by 24%). Maintain Buy with a revised TP of Rs. 237/ share IRB Infrastructure Developers: We like the company s leadership position in winning BOT projects (49% market share in FY15 and 100% market share in YTD FY16); its position as a pioneer in the road asset-owning model owns the highly profitable Mumbai Pune road which earned revenues of Rs. 5.8bn in FY15 and an EBITDA of Rs. 4.8bn; we also like company s ability to consistently win ~300kms of projects every year; we are however not enthused by the legal issues related to the promoter which would drag the propsects. Maintain Add with a revised TP of Rs. 289/ share KNR: We like the company s ability to win road projects in the recent round of bidding (has won Rs. 23bn worth of projects in Apr-May 2015); this lends a very good revenue visibility for the next 3 years (we expect a revenue CAGR of 29% for FY15-17E, translating to a PAT CAGR of 18% for the same period); we also like the clean balance sheet and return metrics (standalone debt/equity of 0,2x and an RoE of 13%). Maintain Buy with a TP of Rs. 635/ share Sadbhav Engineering: We like the company s portfolio of road assets achieved 57% yoy growth in toll collection; strategy to own assets in economically sound states (high traffic growth rates achieved in various assets in FY15) and its diversified EPC skills (mining and roads). It has already won ~Rs. 12bn of EPC projects in FY16E and we expect that it will win minimum Rs. 100bn of projects in FY16E providing tremendous revenue visibility. Maintain Buy with revised TP of Rs. 360/ share Sector Update June 30, 2015 Market Data NIFTY 8318 SENSEX Market Performance 1m 3m 12m NIFTY -1.7% -0.1% 12.8% SENSEX -0.7% 0.7% 10.1% Rating Summary Stock CMP TP Rating Rs. Rs. ASBL IN Buy IRB IN Add KNRC IN Buy SADE IN Buy Market Performance 1m 3m 12m ASBL IN 9.9% 4.7% 32.3% IRB IN -6.6% -5.6% 0.4% KNRC IN -1.2% 21.2% 125.3% SADE IN 1.4% -12.4% 48.8% VIJAYARAGHAVAN SWAMINATHAN raghavan@sparkcapital.in BHARANIDHAR VIJAYAKUMAR bharanidhar@sparkcapital.in Find Spark Research on Bloomberg (SPAK <go>), Thomson First Call, Reuters Knowledge and Factset Page 2

3 Abbreviations used ACL BCCL BOT BRO CCL CFO ECL EPC GQ HP IEBR MCL MHCV MoRTH NCL NEC NH NHAI NHDP NHIDCL NS/ EW O&M PPP PWD SARDP - NE SECL SIPL T&D TN UP WB WCL Ashoka Concessions Ltd Bharat Coking Coal Build Operate Transfer Border Roads Organisation Central Coalfields Cash Flow from Operations Eastern Coalfields Engineering Procurement Construction Golden Quadrilateral Himachal Pradesh Internal & Extra Budgetary Resources Mahanadi Coalfields Medium & Heavy Commercial Vehicles Ministry of Road Transport & Highways Northern Coalfields North Eastern Coalfields National Highways National Highways Authority of India National Highway Development Programme National Highways & Infrastructure Development Corp. North South/ East West Operations & Maintenance Public Private Participation Public Works Department Special Acceleratd Road Development Programme for North East South Eastern Coalfields Sadbhav Infrastructure Project Ltd Transmission & Distribution Tamil Nadu Uttar Pradesh West Bengal Western Coalfields Page 3

4 Valuation Matrix Company Revenues, Rs.mn EBITDA, Rs.mn PAT, Rs.mn RoE Consolidated Numbers Ashoka Buildcon FY14 FY15 FY16E FY17E FY14 FY15 FY16E FY17E FY14 FY15 FY16E FY17E FY14 FY15 FY16E FY17E 17,949 23,197 25,248 28,687 3,945 5,110 6,432 7, ,398 8% 6% 4% 9% IRB 37,319 38,475 59,438 79,136 17,537 22,117 27,962 33,552 4,591 5,429 7,055 8,495 13% 14% 15% 15% KNR Constructions Sadbhav Engineering 8,950 9,312 12,678 15,411 1,314 1,268 2,041 2, % 10% 9% 10% 27,325 34,480 42,791 54,070 4,456 5,867 8,603 12, (1,758) 749 1,861 4% -13% 4% 6% Company CMP Shares M.Cap Net Debt to Equity (x) P/E (x) Price / BV (x) Target Price Rating Consolidated Numbers Rs. (mn) Rs. bn FY14 FY15 FY16E FY17E FY14 FY15 FY16E FY17E FY14 FY15 FY16E FY17E Price (Rs.) Ashoka Buildcon Buy IRB Add KNR Constructions Sadbhav Engineering Buy (28.5) Buy Page 4

5 Industry Section Page 5

6 kms kms Roads Sector Update FY15 achievements and Recent Policy Initiatives National Highways Road Projects Awarded National Highways Roads Constructed Targets & New Programmes for ,183 1, ,954 3, National Highways to be awarded (Kms) 10,000 National Highways to be Constructed (kms) 6,300 Toll to be Collected (Rs. bn) Rs. 65bn FY14 Projects Awarded - NHAI FY15 Projects Awarded - Others FY14 FY15 Projects Constructed Additional length to be brought under Toll (kms) 2,180 Others MoRTH, SARDP NE and NHIDCL projects Overview of Indian Highways Source: Ministry of Road Transport & Highways Recent Policy Initiatives Highways Sector - critical for emerging economies like India due to existing infrastructure gaps and enhanced transportation requirements. A completed highway project has a multiplier effect on the economy. Indian Highways Overall Picture It is world s second largest road network at 4.87 mn kms Consists of 97,135 kms of National Highways (NHs) NHs are 2% of total road network but carry 40% of the traffic 65% of freight & 80% passenger traffic is carried by roads Major Programs currently underway in the Road Sector are - National Highways Development Program (54,478 km NHAI & Others) SARDP-NE (Special program for North East) - 10,141km LWE (Left Wing & Extremism affected areas) - 5,477km Chief implementation authorities are - NHAI, State PWDs, BRO, newly formed NHIDCL for projects in border and other strategic locations Highway Length awarded in FY km Highway Length completed in FY km Increased threshold for project approval -. MoRTH authorized to appraise projects up to Rs. 10bn - both for PPP and EPC mode in place of earlier Rs. 5bn Enhanced Inter-Ministerial coordination - An Infrastructure Group has been created under Minister of MoRTH for addressing inter-ministerial issues. Most of the issues pertaining to Ministry of Environment and Forest; Railways and Defense are sorted out Amendments to the Model Concession Agreement (MCA) - a Committee under the Chairmanship of the Cabinet Secretary has been authorized to effect changes to the MCA. Final draft is expected very soon Exit Policy - the Cabinet has recently allowed private developers to take out their entire equity and exit all operational BOT projects two years from the Commercial Operation Date Revival of Languishing Projects - the Cabinet has recently allowed one time fund infusion by NHAI for revival of BOT projects which are languishing in the construction stage, subject to adequate due diligence of such projects on case to case basis through an institutional mechanism Formation of National Highways & Infrastructure Development Corp Government formed this new organization to focus on road projects in the border, North Eastern States and in other strategic locations Page 6

7 Overview of Hybrid Annuity Model LIFE CYCLE COST BID PARAMETER 40% of Project Cost (Construction Support by Govt) Annuity payments (biannually) for 15 years O&M payments Interest payments (on reducing Bank Rate + x%) Hybrid Annuity Project COD Concession Ends 60% of Project Cost arranged by Concessionaire for Financial Close Construction Period Toll Collection by Govt O&M Period O&M by Concessionaire Overview of the Model Hybrid Annuity Model MoRTH is promoting innovative project implementation models like the Hybrid Annuity Model to encourage investments in highway sector. This model has been adopted for implementation of highway projects in order to maximize the quantum of kms implemented within the available financial resources of the Government. Bid Parameter is Life Cycle Cost i.e. (NPV of the quoted Bid Project Cost + NPV of the O&M Cost for the entire O&M period). Concessionaire receives 40% of Project Cost from NHAI during construction period as 'Construction Support', thereby reducing exposure and risk Concessionaire is responsible for designing, building, financing (60% of the Project Cost), operating and transferring the project at end of operations period (15 years) Amount financed by concessionaire during construction period is to be recovered from NHAI through annuity payments along with interest payments (@ Bank Rate + x%) on reducing balance method O&M responsibilities are with the concessionaire with separate provisions for O&M payments Provision exists for inflation adjusted project cost overtime Page 7

8 Advantages of Hybrid Annuity Model Major Advantages of the Model Reduced initial capital outflow for authority compared to EPC mode Easier debt servicing by concessionaires during the initial years of project compared to BOT (Toll) projects Reduced equity investments by developers Comfort to lenders through assured Annuity payments Private players we have interacted with have evinced interest in the model now Private sector not required to bear the traffic risk Page 8

9 Kms Roads Sector Update #1 - Only 48% of NHDP is constructed so far; 12,851kms is the fresh project award opportunity from NHAI NHDP Program, kms 60,000 50,000 40,000 30,000 20,000 10,000 0 Total Plan % Completion 100% 6,827 95% 6,161 Phase I - GQ Phase II - NS/EW 54% 12,109 Phase III - Upgradation, 4/6-laning 8% 14,799 Phase IV - 2 lanes with paved shoulders 33% 0% 3% 6,500 1, ,533 Phase V - 6 laning of GQ Phase VI - Expressways Phase VII - Ring Roads & Bypasses 77% 48% Others 50,629 Total Only 48% of NHAI road projects plan have been completed till date; with a major fillip to complete construction in the next 4 years we believe project awarding and construction activities should gather pace Progress of the NHDP plan 100% 80% 60% 40% 20% 0% 6,827 6,161 12,109 14,799 6,500 1, ,533 50, ,827 5,833 Phase I - GQ Phase II - NS/EW 5,599 6,510 Phase III - Upgradation, 4/6-laning 13,601 1,198 Phase IV - 2 lanes with paved shoulders 4,385 2,115 Phase V - 6 laning of GQ Completed 1, Phase VI - Expressways Pending 22 Phase VII - Ring Roads & Bypasses 588 1,945 Others 26,179 24,450 Total 12,851 To be awarded 4,636 8,692 Work to be started Under Implementation Fresh projects to be awarded by NHAI is 12,851 in the next 3-5 years Source: NHAI, Spark Capital Research Page 9

10 KMS Roads Sector Update #2 3,026km projects awarded in FY15; likely to see minimum award of ~5,000kms in FY16E from NHAI Trend in NHAI PPP an EPC project awards 8,000 6,000 BOT Projects Awarded EPC Projects Awarded 4,969 5, ,491 5,000 4,000 2, ,000 4,000 3,555 3, ,491 3,026 3,500 5,059 2,800 2,800 1,730 1, ,308 3,367 1,438 2,292 1, ,686 1,395 1, , , FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E NHAI Project Award Plan NA NA NA NA NA NA ~9,000 7,300 5,000 4,000 5,000 Achievement 1,281 4,969 1,730 1, ,555 5,587 6,491 1,116 1,438 3,026 Source: NHAI, MoRTH, Spark Capital Research At its peak, NHAI awarded 6491kms in FY12 all in the PPP mode; with a sectoral downturn from FY13 onwards due to cash crunch with contractors, tepid economy and high interest rates interest from private developers for PPP projects waned resulting in abysmal project awards in FY13 and FY14. With the new government road project awards by NHAI restarted significantly in FY15 with more focus on EPC mode of project awards Against a target of 5,000kms for FY15 actual award has been 3,026kms (734kms in BOT mode and 2,292kms in EPC). This compares favourably with the subdued award activity witnessed in FY13 and FY14 (2,554kms combined) ~13,000kms is the fresh award opportunity from NHDP; with an estimated Rs. 295bn from cess & toll collections and with Rs. 240bn of estimated inflows from tax-free bonds and capital gain bonds u/s 54EC, we believe 5,000kms of awarding should be realistic in FY16E, in our view (40% in EPC mode, 35% in Hybrid Annuity Model and the rest 25% likely in the BOT mode) Page 10

11 Rs. bn Roads Sector Update #3 Funding for NHAI Funding for NHAI, Rs. bn Budgetary allocation to NHAI from Cess Fund has significantly increased in FY16E vs. FY (50) FY10 FY11 FY12 FY13 FY14 FY15 FY16E Revised FY16E From NH Permanent Bridges Fees fund From Road Fund NHAI IEBR funds Income and Sources of Funds for NHAI (FY13) Source: NHAI Money received from MoRTH for maintenance of NHs 3% Bonds 22% Fund received from MoRTH for special projects 15% From Permanent Bridges Fees Fund 14% Cess Fund received by NHAI from MoRTH 46% NHAI Funding Rs. 96bn from Cess and Rs. 54bn from toll/ revenue share in FY15 Government of India introduced a Cess on both Petrol and Diesel sales in the country; the cess collected were to be put aside in a Central Road Fund (CRF) for exclusive utilization for the development and maintenance of sate and national highways ~Rs.60bn was allocated to NHAI in FY13 from this cess fund (~Rs. 96bn in FY15) NHAI also collects toll (on ~6,600kms of NH constructed by NHAI), and receives money from revenue share and negative grant/premium; it deposits this in the Consolidated Fund of India (it deposited ~Rs. 39bn in FY13). Against this, MoRTH releases money to NHAI as Additional Budgetary Support through Permanent Bridge Fee Fund (PBFF) as plough back of Toll Remittance made to CFI (amounted to ~Rs.18bn in FY13, while it has been ~Rs. 54bn in FY15) NHAI also raises money by way of issue of Capital Gain Tax free Bonds under Section 54-EC of the Income Tax Act, This amounted to ~Rs.30bn in FY13 NHAI also gets finding from Internal & Extra Budgetary Resources which primarily comes from private players which is estimated to be ~Rs. 240bn for FY16E Page 11

12 #4 Near term NHAI project opportunity tenders are outstanding for 1,147km in BOT mode and 850kms in EPC mode Near term BOT opportunity from NHAI Near term EPC opportunity from NHAI Total Kilometers: 1,147 Total Projects: 10 Total Kilometers: 850 Total Projects: 24 PROJECTS: 1 15 KMS 37 KMS PROJECTS: 1 PROJECTS: 1 48 KMS 145 KMS PROJECTS: 1 41 KMS PROJECTS: 1 PROJECTS: 1 16 KMS 477 KMS PROJECTS: KMS PROJECTS: KMS PROJECTS: 4 PROJECTS: KMS 258 KMS PROJECTS: 3 PROJECTS: 4 44 KMS 171 KMS PROJECTS: 1 Source: NHAI Source: NHAI Page 12

13 #4 Near term NHAI project opportunity 72% of the projects have seen delays from earlier bid dates BOT projects for which bids are being invited e-tendering date kms State Comments Banjhabahal to Telebani NA 78 Orissa Delayed from earlier date Telebani to Sambalpur NA 75 Orissa Delayed from earlier date Singhara to Binjabahal NA 105 Orissa Delayed from earlier date Chakeri Allahabad 8-Jul UP Delayed from earlier date Amravati-Chikli 25-Jun Maharashtra Delayed from earlier date Chikli-Fagne 25-Jun Maharashtra Delayed from earlier date Fagne MAH/Guj Border 25-Jun Maharashtra Delayed from earlier date Bhavnagar-Talaja 15-Jul Gujarat Delayed from earlier date Tamil Nadu/Karnataka Border to Bangalore 30-Jun TN NEW PROJECT Barhi to Hazirabad 30-Jun Jharkhand NEW PROJECT Total 1,147 EPC projects for which bids are being invited e-tendering date kms State Comments Patna to Koilwar 10-Jul Bihar NEW PROJECT Koilwar to Bhojpur 10-Jul Bihar NEW PROJECT Bhojpur to Buxar 10-Jul Bihar NEW PROJECT Aligarh Moradabad 15-Jul UP NEW PROJECT Kharar-kurali Awarded 15 Punjab Delayed from earlier date Dalkhola Bypass 2-Jul-15 6 WB Delayed from earlier date Islampur Bypass 2-Jul-15 8 WB Delayed from earlier date Ghoshpukur Salsalabari 30-Jun WB Delayed from earlier date Varanasi Gorakhpur 13-Jul UP Delayed from earlier date Varanasi Gorakhpur 14-Jul UP Delayed from earlier date Varanasi Gorakhpur 16-Jul UP Delayed from earlier date 6 laning of Eastern Peripheral Expressway 7-Jul UP Delayed from earlier date 6 laning of Eastern Peripheral Expressway 7-Jul UP Delayed from earlier date 6 laning of Eastern Peripheral Expressway 7-Jul UP Delayed from earlier date 6 laning of Eastern Peripheral Expressway 7-Jul UP Delayed from earlier date 6 laning of Eastern Peripheral Expressway 7-Jul UP Delayed from earlier date 6 laning of Eastern Peripheral Expressway 7-Jul UP Delayed from earlier date JNPT Roads 1-Jul-15 3 Maharashtra Delayed from earlier date JNPT Roads 1-Jul Maharashtra Delayed from earlier date JNPT Roads 1-Jul Maharashtra Delayed from earlier date JNPT Roads 1-Jul Maharashtra Delayed from earlier date Kullu Manali 28-Jul HP Delayed from earlier date Kamrej Chalthan 4-Aug Gujarat NEW PROJECT Chichra to Kharagpur 5-Aug WB NEW PROJECT Total 850 Apart from this there is 383kms of projects in active tender stage invited by MoRTH Page 13

14 #5 NHAI projects awarded in FY15 3,026kms awarded EPC projects awarded in FY15 # Project kms Phase State Cost, Rs. mn Winning Bidder Nagapattinam-Thanjavur 79 Phase III Tamil Nadu 5,639 Madhucon Projects 2 Jabalpur Lakhnadone 81 Phase IV Madhya Pradesh 9,288 Larsen & Toubro 3 Rewa Katni Jabalpur 69 Phase IV Madhya Pradesh 7,943 Larsen & Toubro 4 Rewa Katni Jabalpur 69 Phase IV Madhya Pradesh 7,958 Larsen & Toubro 5 Rewa Katni Jabalpur 68 Phase IV Madhya Pradesh 8,102 Larsen & Toubro 6 Ghaghara Bridge - Varanasi 59 Phase IV Uttar Pradesh 6,117 Dilip Buildcon-Varha Infra Ltd(JV) 7 Parwanoo- Solan 39 Phase III Himachal Pradesh 9,345 GR Infra 8 Kharar-Kurali 14 Misc. Punjab 2,459 NA 9 Ambala - Kaithal 51 Phase III Haryana 4,602 Sadbhav Engineering 10 Ambala - Kaithal 45 Phase III Haryana 4,831 Dilip Buildcon 11 Udhampur to Ramban 43 Phae II UP 13,317 Gammon India 12 Ramban to Banihal 36 Phae II J&K 12,387 HCC 13 Hisar to Dabwali 57 Phase IV Haryana 5,798 GR Infra 14 Hisar to Dabwali 88 Phase IV Haryana 6,954 GR Infra 15 Varanasi Bypass 17 Phase IV Uttar Pradesh 2,673 Apco Infratech 16 Barmer - Sanchor 106 Phase IV Rajasthan 5,381 Monte Carlo 17 Bijapur - Gulbarga - Hamnabad 220 Phase IV Karnataka 7,090 Larsen & Toubro 18 Jodhpur Pokaran 139 Phase IV Rajasthan 4,556 GR Infra 19 Chas -Ramgarh 78 Phase IV Rajasthan 3,416 Dilip Buildcon 20 Ludhiana - Talwandi 6 Phase III Punjab 466 Ceigall India 21 Sitarganj Tanakur 52 Phase IV Uttarakhand 520 H.G. Infra Engineering 22 Phalodi -Jaisalmer 161 Phase IV Rajasthan 5,615 Corson Corviam Construction 23 Talchar -Dubari-Chandikhole 132 Phase III Odisha 9,964 Corson Corviam Construction 24 Patna - Gaya - Dhobi 127 Phase III Bihar 10,270 IL&FS Engineering and Construction 25 Karaikudi - Ramanathapuram 80 Phase III Tamil Nadu 4,516 Transtroy 26 Jaisalmer-Barmer 131 Phase IV Rajasthan 4,823 GR Infra 27 Flyover at Bahalgarh 7 Misc. Haryana 780 Gawar constructions 28 Tirumayam - Manamadurai 78 Phase IV Tamil Nadu 4,011 Dilip Buildcon 29 Jodhpur - Barmer 86 Phase IV Rajasthan 2,647 Sadbhav Engineering 30 Jodhpur - Barmer 74 Phase IV Rajasthan 2,061 GR Infra Total 2, ,527 BOT projects awarded in FY15 # Project kms State Cost, Rs. mn Winning Bidder 1 Shivpuri-Guna 97 Phase IV Madhya Pradesh 8,304 IRCON International 2 Hospet-Chitradurga 120 Phase III Karnataka 13,880 Tril Roads 3 Aurangabad-Yedishi 190 Phase IV Maharashtra 18,753 IRB Infrastructure 4 Bikaner - Phalodi 160 Phase IV Rajasthan 8,229 IRCON International 5 Kaithal Rajasthan 166 Phase IV Haryana 13,930 IRB Infrastructure Total ,096 Page 14

15 #6 Competition for NHAI BOT and EPC projects BOT projects awarded in FY16 till May # Project kms State Cost, Rs. mn Winning Bidder 1 Four Laning of Solapur - Bijapur 109 Maharashtra 13,775 Uniquest Infra Ventures Pvt Ltd EPC projects awarded in FY16 till May 2 Four Laning of Madurai - Ramanathapuram (km 5. to km 81) and Two laning with PS km 81 to km Tamil Nadu 13,871 KNR Construction Ltd UP/Haryana border - Yamuna Nagar -Saha- Barwala - Panchkula ( PKG - 1) UP/Haryana border - Yamuna Nagar -Saha- Barwala - Panchkula( PKG - 2) 4 laning of Kazhakkottam to Mukkola section of NH Haryana 6,009 Sadbhav Engineering Ltd 42 Haryana 5,623 Sadbhav Engineering Ltd 27 Kerala 8,452 KNR Constructions Ltd Total 228 Serious bidders for BOT projects Competitive Intensity for EPC projects Size of project (Rs. mn) Number of bidders <Rs. 5bn players Rs. 5bn Rs. 10bn 5-10 players Page 15

16 NEC BCCL ECL WCL CCL NCL SECL MCL Total Mn tonnes Mn tonnes MHCV Sales, nos Roads Sector Update #7 - Lead indicators for commercial traffic growth MHCV sales & Mining Activity trends MHCV sales has picked-up since September ,000 30,000 25,000 20,000 15,000 10,000 5,000 0 yoy growth, % 80.0% 60.0% 40.0% 20.0% -0.0% -20.0% -40.0% -60.0% Source: SIAM Iron Ore Production in the Country FY2012 FY2013 FY2014 FY2015 Orissa Chhatttisgarh Goa Jharkhand Karnataka Source: Indian Bureau of Mines, Spark Capital Research Coal India 12% yoy production growth % 14% 16% 12% 31% Apr - May 2015 Apr - May 2016 Source: Coal India Ltd Lead Indicators for Commercial Traffic Growth MHCV sales have picked-up from September 2015 (albeit on a low base in FY14); our Auto analyst is of the view that this pick-up is more replacement of older MHCVs rather than addition of new fleet; however this trend is likely to be a precursor for new fleet additions which will be positive for road traffic Our Cement analyst is of the view that various infrastructure projects in Eastern India has improved cement demand in that region which augurs well for traffic again Iron ore production is still subdued in the country due to falling demand for exports, lower prices and mining ban in Orissa & Goa; it is unlikely to pick-up in the near term Coal production has seen significant growth in FY15 (7% yoy) and 12% in Apr-May FY16; double digit growth in eastern mines of MCL, SECL and NCL means more mining activity in the region Page 16

17 Company Section Page 17

18 Road-wise traffic growth rates Ashoka Buildcon Ltd IRB Infrastructure Developers Ltd Sadbhav Engineering Ltd NHAI Roads Traffic Growth # Road NH-6 Bhandara Road -5% -4% 4% 2 3 NH-6 Durg Bypass, Chhattisgarh - Maharashtra Border Road NH-3 Pimpalgaon Nashik Gonde Road - -2% 4% - 6% 5% 4 NH-4 Belgaum-Dharwad Road 14% -4% 5% 5 NH-6 Sambalpur-Baragarh Road NH-6 Dhankuni to Kharagpur Road State Roads - NA 1% Traffic Growth # Road Indore Edalabad Road -2% 9% 28% 2 Ahmednagar Aurangabad Road -2% -5% 7% 3 Wainganga Bridge -2% -1% 4% 4 Nashirabad Railway-Over Bridge KSHIP WAP-2 UI UI UI 6 Jaora Nayagaon Road NA 9% -2% 7 Chennai ORR UI UI UI Source: NHAI, Companies, Spark Capital Research NHAI Roads Traffic Growth # Road Surat Dahisar Road, NH 8 4% 4% 8% 2 Bharuch Surat BOT, NH 4 6% -2% 6% 3 Tumkur Chitradurg, NH 4 21% -4% 8% 4 Talegaon Amravati, NH Pathankot Amritsar, NH Jaipur Deoli, NH Ahmedabad Vadodara -NH 8 & Ahmedabad Vadodara Expressway Goa/ Karnataka Border to Kundapur, NH- 17 Omallur -Salem Namakkal Section of NH-7 Solapur -Yedeshi section of NH-211 Yedeshi Aurangabad section of NH-211 Kaithal Rajasthan Border section of NH 152/65 State Roads - - NA % 54% 56%* Traffic Growth # Road Mumbai Pune BOT, MPEW & NH4 Thane Ghodbunder Toll Road BOT 5% 5% 12% -9% 5% 21% 3 Thane Bhiwandi Bypass BOT 3% -5% 0% 4 Pune Nashik BOT, NH 50-3% -9% 1% 5 Pune Sholapur BOT -3% 1% 9% NHAI Roads Traffic Growth # Road NH-3 Mumbai - Nashik Expressway - - ~10% 2 NH-13 Bijapur - Hungund - - ~3% 3 NH-202 Hyderabad Yadgiri - - ~12% 4 NH-3 Dhule - Palesnar - - ~5% 5 NH-71A Rohtak Panipat - - 6% 6 NH-8 Shreenathji - Udaipur UI UI UI 7 NH-758 Bhilwara - Rajsamand UI UI UI 8 NH-7 Rohtak - Hissar UI UI UI State Roads Traffic Growth # Road Aurangabad Jalna 3% 1% ~9% 2 Ahmedabad Ring Road -2% 0% ~8% 3 SH-3 Mysore Bellary Annuity Page 18

19 Quarterly Toll Collection Trends Ashoka Buildcon GQ NH 6 State Projects NHAI Projects Jaora Nayagaon 159% 1QFY13 72% 72% 21% 9% 20% 16% 20% 7% 0% 5% 9% 4QFY15 Operational Under Implementation Indore Edalabad 6% 2% 2% 1QFY13 12% 19% 13% 12% 18% 32% 46% 38% 26% 4QFY15 10% 7% -2% 0% 4% -1% 3% 8% 10% 9% 12% 9% Bhandara Road 1QFY13 4QFY15 Durg Bypass 1QFY13 2% 3% 5% 8% 9% 9% 12% 9% 4QFY15 Dhankuni Kharagpur 1QFY13 31% 32% 28% 31% 2% 6% 9% 9% 4QFY15 Sambalpur Baragarh Traffic growth rate is still subdued at ~Rs. 1mn/ day toll collection vs. initial expectation of ~Rs. 2.4mn/ day Pimpalgaon-Nashi k 1QFY13 14% -4% 53% 149% 136% 129% 4QFY15 Belgaum - Dharwad 72% 1QFY13 9% 15% 4% 2% -2% 0% 6% 8% 9% 10% 12% 4QFY15 Page 19

20 Quarterly Toll Collection Trends Sadbhav Engineering GQ NH 3 East West Corridor State Projects North South Corridor NHAI Projects Operational Under Implementation Ahmedabad Ring Road 18% 27% 4% 3% 1QFY15 2QFY15 3QFY15 4QFY15 Dhule Palesner 52% 22% 7% 8% 1QFY15 2QFY15 3QFY15 4QFY15 Aurangabad - Jalna 106% 4% 14% 16% 1QFY15 2QFY15 3QFY15 4QFY15 Mumbai Nashik Expressway Has witnessed 9% traffic growth rate for the month of April 2015 Hyderabad Yadgiri 17% 20% 16% 17% 1QFY15 2QFY15 3QFY15 4QFY15 Bijapur Hungund 5% 10% 10% 15% 1QFY15 2QFY15 3QFY15 4QFY15 Page 20

21 Quarterly Toll Collection Trends IRB GQ NH 3 East West Corridor State Projects North South Corridor NHAI Projects Jaipur Deoli 1QFY13 55% 4QFY15 Operational Under Implementation Ahmedabad Vadodara 1QFY13 29% 4QFY15 Bharuch Surat 14% 1QFY13 14% 5% 19% 5% 0% 9% -1% 9% 13% 14% 10% 4QFY15 Surat Dahisar Talegaon Amravati 13% 1QFY13 1QFY13 9% 9% 12% 10% 12% 10% 8% 12% 14% 14% 14% 4QFY15 53% 4QFY15 Mumbai Pune 5% 1QFY13 4% 5% 4% 5% 5% 5% 5% 24% 24% 34% 36% 4QFY15 Pune Nashik 0% 1QFY13 10% 4% 3% 5% -6% -5% -7% -4% 9% 9% 15% 4QFY15 Pune Sholapur 7% 4% 2% 2% 1% 0% 11% 16% 17% 25% 15% 4% 1QFY13 4QFY15 Tumkur Chitradurg 264% 2% 4% 5% -6% 1% 8% 6% 15% 13% 10% 14% 1QFY13 4QFY15 Omallur -Salem 0% 0% 0% 0% 0% 0% 5% 1QFY13 14% 15% 15% 34% 16% 4QFY15 Page 21

22 Rs. Mn Rs. Mn Rs. Mn Roads Sector Update Toll Collection for key assets Ashoka Buildcon YoY Growth in FY15 10,000 8,000 6,000 4,000 2, % 5% 35% 114% 10% 31% 8,947 7,277 6,299 1,553 2,024 2, ,089 1,267 1, , NH-6 Dhankuni to Kharagpur Section Jaora Nayagaon Road Indore Edalabad Road NH-3 Pimpalgaon Nashik Gonde road NH-6 Durg Bypass, Chhattisgarh - Maharashtra Border Road 3,518 Total For Ashoka Buildcon, Indore Edalabad is the most profitable and cash throwing asset (EBITDA of Rs. 640mn in FY14) while Dhankuni - Kharagpur is the largest asset by toll collection potential IRB Infrastructure Developers YoY Growth in FY15 25,000 20,000 15,000 10,000 5,000 0 Sadbhav Engineering YoY Growth in FY15 8,000 6,000 4,000 2, % 14% 12% 13% 65% 61% 3,977 4,162 4,377 5,672 4,009 4,441 4,879 5,549 Mumbai Pune BOT MPEW & NH4 1,1161, , Dhule Palesner Tollway Limited (DPTL) Surat Dahisar Road, NH 8 Bijapur-Hungund Tollway Private Limited (BHTPL) 1,429 1,612 1,666 1,858 1,257 1,596 1,630 1, ,566 Bharuch Surat BOT NH 4 Maharashtra Border Checkpost Network Limited (MBCPNL) Tumkur Chitradurg NH 4 Ahmedabad Vadodara -NH 8 & Ahmedabad Vadodara Expressway Rohtak Panipat Tollway Private Limited (RPTPL) Ahmedabad Ring Road Infrastructure Limited (ARRIL) 16,255 14,111 12,291 21% 245% 203% 381% 13% 57% Total 4,636 3,497 2,073 Total 20,927 7,300 For IRB, Mumbai Pune road is the most cash throwing and the largest asset by toll collection potential (with Revenues of Rs. 5.7bn and an estimated EBITDA of Rs. 4.8bn For Sadbhav Engineering Ahmedabad Ring Road is the most cash throwing asset (estimated EBITDA of Rs. 750mn in FY15) while Maharashtra Border Checkpost has the most toll collection potential (Rs. 7mn/ day when all checkposts are operational) Source: Companies, Spark Capital Research FY12 FY13 FY14 FY15 Page 22

23 Traffic Rate and Interest Rate Sensitivities to Asset Valuations - >20% sensitivity to traffic growth, ~7% to interest rates If interest rates are If interest rates are Ashoka Sensitivity table (Rs./ share) Base Case reduced by increased by Project Value to Ashoka per share 2% 1% 0% 1% 2% Indore Edalabad Road Ahmednagar Aurangabad Road Wainganga Bridge Nashirabad Railway-Over Bridge KSHIP WAP NH-6 Bhandara Road NH-6 Durg Bypass Jaora Nayagaon Road NH-3 Pimpalgaon Nashik Gonde road NH-4 Belgaum-Dharwad Road NH-6 Sambalpur-Baragarh Road NH-6 Dhankuni to Kharagpur Section Chennai ORR Value of Ashoka Buildcon s road assets If interest rates are If interest rates are Sadbhav Sensitivity table (Rs./ share) Base Case reduced by increased by Project Value to Sadbhav per share 2% 1% 0% 1% 2% Aurangabad Jal`na Ahmedabad Ring Road Nagpur Seoni Maharashtra Border Checkpost Bijapur-Hungund Hyderabad Yadgiri Dhule Palesner Rohtak Panipat Shreenathji-Udaipur Bhilwara Rajsamanad Rohtak Hissar Mysore Bellary Total Less: SIPL Net Debt Value of SIPL per share Value of SIPL per share after holdco discount If traffic is reduced by Base Case If traffic is increased by 2% 1% 0% 1% 2% If traffic is reduced by Base Case If traffic is increased by 2% 1% 0% 1% 2% Page 23

24 EPC Business - Order inflow and Orderbook ASBL Order Inflow, Rs. mn IRB Order Inflow, Rs. mn KNRC Order Inflow, Rs. mn SADE Order Inflow, Rs. mn 38,192 18,132 24,009 23,570 16,570 26,851 12,486 45,360 48,800 76,900 5,764 11,580 11,161 10,330 7,905 5,879 28,142 30,038 23, ,420 26,390 14,900 2,927 5,876 10,023 9,848 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Total Road EPC projects won T&D projects won Has received orders worth Rs. 24bn in April, May 2015 Mining Irrigation Transportation Orderbook Orderbook Orderbook Orderbook BOT Projects - O&M 15% Ongoing BOT projects 25% Mining 29% Power T&D 56% Roads 44% Roads BOT 96% Total: Rs. 31,056mn projects - yet to start construction 60% Total: Rs. 126,312mn Total: Rs. 57,472mn Total: Rs. 81,999mn Irrigation 4% Transportation 46% Irrigation 25% EPC Margins, % EPC Margins, % EPC Margins, % EPC Margins, % Road EPC Road Captive Power T&D Road EPC for Captive projects Road EPC Road projects on sub-contract Road EPC, Captive Mining Irrigation 12.5% 13.0% 11.0% 25% - 35% 14% 11% 11%, 13% 18% - 22% 6% Page 24

25 EPC Business Order inflow in the near term ASBL Order Inflow, Rs. mn IRB Order Inflow, Rs. mn 34,000 56,500 55,000 24,000 26,500 0 YTDFY16E FY16E FY17E YTDFY16E FY16E FY17E Road BOT projects won Road EPC projects won T&D projects won Road BOT KNRC Order Inflow, Rs. mn SADE Order Inflow, Rs. mn 30, , ,195 23,352 8,000 13,578 YTDFY16E FY16E FY17E YTDFY16E FY16E FY17E Road EPC Mining Irrigation Transportation Page 25

26 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E 11,948 13,380 16,376 15,566 19,667 20,381 22,536 16,704 22,759 27,289 26,579 21,084 38,605 55,747 7,930 7,505 6,921 8,348 8,761 12,436 14,687 22,094 26,755 18,110 23,581 29,698 36,699 45,125 Roads Sector Update EPC Business Revenues and Profitability Ashoka Buildcon IRB KNR Constructions Sadbhav Engineering Standalone Revenues, Rs. mn 26% 28% 30% 32% 34% 27% 24% 14% 14% 12% 13% 13% 13% 12% 16% 18% 17% 15% 14% 15% 14% 11% 11% 9% 11% 10% 11% 11% Revenue EBITDA Revenue EBITDA Revenue EBITDA Revenue EBITDA Standalone PAT, Rs. mn 16% 5,461 12% 847 1,045 1,022 1,034 1,422 1,393 1,703 2,243 2,986 3,520 3,342 1,925 3,966 10% ,021 1,196 1, % 1,062 1,137 1,558 2,346 Standalone EPS, Rs./ share Page 26

27 Rs. Mn Rs. Mn Rs. Mn Rs. Mn Roads Sector Update Debt Standalone and Consolidated at the end of FY15 Ashoka Buildcon Sadbhav Engineering D/E, 2015 D/E, x 2.0 x 45,000 80,000 40,000 70,000 35,000 3,890 60,000 30,000 50,000 25,000 40,000 20,000 38,730 34,840 15,000 30,000 10,000 20,000 5,000 10, SPV Debt Standalone Debt Total Consolidated Debt 0.7 x 3.8 x 9,383 57,647 67,030 SPV Debt Standalone Debt Total Consolidated Debt KNR Constructions IRB Infrastructure Developers D/E, x 0.8 x D/E, , ,000 7, ,000 6, ,000 5,000 80,000 4,000 3,000 6,718 7,600 60,000 2,000 40,000 1,000 20, SPV Debt Standalone Debt Total Consolidated Debt 1.1 x 2.8 x 22, ,859 99,292 SPV Debt Standalone Debt Total Consolidated Debt Page 27

28 Ashoka Buildcon Cashflows for next 3 years Ashoka Buildcon FY16E FY17E FY18E Cash outflow, Rs. mn Equity Requirement for projects under construction 150 9,000 9,000 Rs. 150mn for KSHIP project and assuming total of Rs. 18bn of equity requirement for the estimated Rs. 60bn of new BOT projects ACL assets interest payments 2,725 3,879 3,940 Interest for the Rs. 35bn ACL level debt ACL assets debt repayment ,074 Standalone Capex For Equipment CAPEX Standalone interest payments Total Cash outflow (ACL+ABL) 3,942 14,094 14,646 Cumulative Cash Outflow 3,942 18,036 32,682 For the next 3 years we estimate a cumulative cash outflow of Rs. 32.7bn (not taking into account the debt component for new BOT assets) Cash Inflows, Rs. mn Consolidated cash balance as at March Qualified Institutional Placement (QIP) cashflow 5,000 SBI-Macquarie EQUITY available 5,410 ACL CFO 4,694 6,391 7,208 CFO from EPC (standalone) business 3,121 2,323 2,814 CFO from ABL BOT assets (Indore Edalabad etc.) 711 1,336 1,768 Total cash inflows 13,936 10,050 11,790 Cumulative Cash Inflow 13,936 23,986 35,776 Apart from this, Company will likely monetize the landbank it has (book value of ~Rs. 2.5bn and market value ~Rs. 6.5bn) if required We estimate a cash inflow of Rs. 35.8bn in the next 3 years (excluding debt for new BOT projects) which will comfortably fund the Company Page 28

29 Sadbhav Engineering near-term cashflow assuming SIPL IPO at Rs. 4.25bn Sadbhav Engineering SEL standalone Indicative P&L SIPL FY16E FY17E FY18E FY16E FY17E FY18E Revenues 36,000 45,000 50,000 7,500 9,000 12,000 EBITDA 3,888 4,860 5,400 6,375 7,650 10,200 Depreciation 1,000 1,000 1,000 1,500 2,000 3,000 EBIT 2,888 3,860 4,400 4,875 5,650 7,200 Interest ,500 6,000 7,000 PBT 2,288 3,260 3,800 (625) (350) 200 TAX 755 1,076 1, PAT, Rs. mn 1,533 2,184 2,546 (625) (350) 200 Assuming no other income Cash from Operations, Rs. mn PBT 2,288 3,260 3,800 (625) (350) 200 Add: Depreciation 1,000 1,000 1,000 1,500 2,000 3,000 Add: Interest ,500 6,000 7,000 Less: Tax (755) (1,076) (1,254) Total 3,133 3,784 4,146 6,375 7,650 10,200 Assuming 11% EBITDA margin for EPC business and 85% for road assets Estimating that the interest cost of standalone comes down from Rs. 1bn to Rs. 600mn due to loan given to SIPL being repayed Cash From Investing, Rs. mn Equity portion of CAPEX (800) (800) (800) (1,400) 0 0 Total (800) (800) (800) (1,400) 0 0 Equity required for ongoing Shreenathji Udaipur and Mysore Bellary projects Cash From Financing, Rs. mn Equity 0 4,250 Money from proposed SIPL IPO Repayment of: Loans and Advances 800 (800) SIPL partially paying the loans taken from SEL Repayment of: Term Loans (1,800) (2,641) (3,755) SIPL repaying term loans Interest (600) (600) (600) (5,500) (6,000) (7,000) Total 200 (600) (600) (3,850) (8,641) (10,755) Net Cash 2,533 2,384 2,746 1,125 (991) (555) We estimate that SIPL will be able to fund cash requirements comfortably (assuming an IPO of Rs. 4.25bn in FY16E) Page 29

30 Ashoka Buildcon SoTP Valuation Ashoka Buildcon Ashoka's Stake Valuation Method Equity Value Value to ABL per share % Projects % Rs. mn Rs. mn Rs. Indore Edalabad Road 100% FCFE using 12% CoE 1,580 1, % Ahmednagar Aurangabad Road 100% FCFE using 12% CoE % Wainganga Bridge 50% FCFE using 12% CoE % Nashirabad Railway-Over Bridge 100% FCFE using 12% CoE % KSHIP WAP-2 51% FCFE using 13% CoE % Total Value for ABL's Road Assets 3,281 2, % NH-6 Bhandara Road 31% FCFE using 12% CoE 2, % NH-6 Durg Bypass 31% FCFE using 12% CoE 4,106 1, % Jaora Nayagaon Road 45% FCFE using 12% CoE 9,687 4, % NH-3 Pimpalgaon Nashik Gonde road 16% FCFE using 12% CoE 15,467 2, % NH-4 Belgaum-Dharwad Road 61% FCFE using 14% CoE 1, % NH-6 Sambalpur-Baragarh Road 61% FCFE using 14% CoE % NH-6 Dhankuni to Kharagpur Section 61% FCFE using 14% CoE 9,075 5, % Chennai ORR 31% FCFE using 13% CoE 5,232 1, % Total Value for ACL's Road Assets 47,727 17, % Construction & RMC Business 100% 15x FY17E EPS 24,501 24, % Ashoka Buildcon 75,508 44, % Ashoka Buildcon has invested ~Rs. 9bn so far into ACL We are valuing their stake at ~2x of their equity investment Page 30

31 IRB SoTP Valuation IRB Infrastructure IRB's Stake Valuation Method Equity Value Value to IRB per share % Projects % Rs. mn Rs. mn Rs. Mumbai Pune BOT, MPEW & NH4 100% FCFE using 12% CoE 21,577 21, % Surat Dahisar Road, NH 8 90% FCFE using 12% CoE 1,803 1, % Bharuch Surat BOT, NH 4 100% FCFE using 12% CoE 2,450 2, % Thane Ghodbunder Toll Road BOT 100% FCFE using 12% CoE % Tumkur Chitradurg, NH 4 100% FCFE using 12% CoE 8,962 8, % Talegaon Amravati, NH 6 100% FCFE using 12% CoE 3,063 3, % Thane Bhiwandi Bypass BOT 100% FCFE using 12% CoE 3,733 3, % Pune Nashik BOT, NH % FCFE using 12% CoE 2,182 2, % Pune Sholapur BOT 100% FCFE using 12% CoE % Ahmednagar Karmala Tembhurni Road, SH % FCFE using 12% CoE % Mohol-Kurul-Kamtee-Mandrup Road, SH % FCFE using 12% CoE % Bridge over Patalganga River-Kharpada BOT 100% FCFE using 12% CoE % Integrated Road Development in Kolhapur 100% FCFE using 12% CoE 6,127 6, % Pathankot Amritsar, NH % FCFE using 12% CoE 6,331 6, % Jaipur Deoli, NH % FCFE using 12% CoE 8,577 8, % Ahmedabad Vadodara -NH 8 & Ahmedabad Vadodara Expressway 100% FCFE using 12% CoE 10,206 10, % Goa/ Karnataka Border to Kundapur, NH % FCFE using 12% CoE 8,917 8, % Omallur -Salem Namakkal Section of NH-7 74% at investment value 1, % Solapur -Yedeshi section of NH % FCFE using 13% CoE 4,163 4, % Yedeshi Aurangabad section of NH % FCFE using 13% CoE 3,074 3, % Kaithal Rajasthan Border section of NH 152/65 100% FCFE using 13% CoE 4,261 4, % Agra - Etawah 100% FCFE using 13% CoE 2,198 2, % Total Value for BOT Road Assets 101, , % Other investments - Airports, Real Estate 100% at investment value % IRB Infrastructure Developers 135, , % Page 31

32 Sadbhav Engineering SoTP Valuation Equity Value to Sadbhav Engineering Stake Valuation Method per share % Value SEL Projects SIPL's stake SEL's stake Rs. mn Rs. mn Rs. Sadbhav Engineering Standalone 100% 15x FY17E EPS 38,961 34, % Sadbhav Infrastructure Project Ltd (SIPL) Aurangabad Jalna 100% 71% FCFE using 12% CoE 3,855 2, % Ahmedabad Ring Road 100% 71% FCFE using 12% CoE 7,400 5, % NH-3 Mumbai - Nashik Expressway 0% 0% FCFE using 12% CoE NH-7 Nagpur - Seoni 100% 71% FCFE using 12% CoE % Maharashtra Border Checkpost 78% 55% FCFE using 12% CoE 11,659 6, % NH-13 Bijapur - Hungund 77% 55% FCFE using 12% CoE 10,256 5, % NH-202 Hyderabad Yadgiri 100% 71% FCFE using 12% CoE 4,568 3, % NH-3 Dhule - Palesnar 100% 71% FCFE using 12% CoE 5,309 3, % NH-71A Rohtak Panipat 100% 71% FCFE using 12% CoE 4,218 2, % Total Value for Operational Road Assets 47,430 29, % 0% NH-8 Shreenathji - Udaipur 100% 71% FCFE using 13% CoE 8,309 5, % NH-758 Bhilwara - Rajsamand 100% 71% FCFE using 13% CoE 3,760 2, % NH-7 Rohtak - Hissar 100% 71% FCFE using 13% CoE 2,726 1, % SH-3 Mysore Bellary 74% 53% FCFE using 13% CoE % Total Value for Under Construction Road Assets 15,277 10, % 0% Less: Net Debt at SIPL standalone in FY16E 71% 5,966 4, % Total Value for SIPL 56,741 35, % Value of SIPL after giving holdco discount 25% holdco discount 42,556 26, % Total Value for Sadbhav Engineering 77,517 61, % There has been a total equity investment of ~Rs. 18bn into SIPL, we are valuing it at ~2.4x of this investment Sadbhav has invested ~Rs. 9.2bn into SIPL Page 32

33 KNR Constructions SoTP Valuation KNR Constructions - SoTP Valuation Stake Method Project Equity Value Value for KNR per share % BoT Projects Patel KNR Infrastructures Ltd 40% FCFE with 14% CoE % Patel KNR Heavy Infrastructures Ltd 40% FCFE with 14% CoE % Walayar to Vadakkancherry 100% FCFE with 14% CoE 2,197 2, % Standalone/ EPC Business 100% 15x FY17E EPS 15,308 15, % Total Value for KNR Constructions 17, % Page 33

34 Ashoka Buildcon Consolidated Financial Summary Abridged Financial Statements Key metrics Rs. mn FY14 FY15 FY16E FY17E FY14 FY15 FY16E FY17E Profit & Loss Growth Revenues 17,949 23,197 25,248 28,687 Revenues -3% 29% 9% 14% EBITDA 3,945 5,110 6,432 7,779 EBITDA 6% 30% 26% 21% Other Income PAT 16% -16% -33% 157% Depreciation 1,389 1,517 2,101 2,568 Margin ratios EBIT 2,730 3,791 4,513 5,571 EBITDA 22% 22% 25% 27% Interest 1,335 2,721 3,890 4,065 PAT 5% 4% 2% 5% PBT 1,237 1, ,506 PAT after MI ,398 Performance ratios Balance Sheet RoA (%) 0.8% 0.6% 0.4% 1.0% Net Worth + MI 17,274 18,617 18,777 19,753 RoE (%) 8.4% 6.2% 3.9% 9.3% Total debt 31,032 37,843 37,522 36,821 RoCE (%) 2.2% 2.9% 3.4% 4.2% Other Non Current Liabilities 77,606 77,797 76,942 77,486 Total Assets Turnover (x) Long term provisions 720 1,033 (1,046) (2,814) Fixed Assets Turnover (x) Total Networth & Liabilities 126, , , ,246 Working capital Turnover (x) Financial stability ratios Gross Fixed assets 46,718 55, , ,956 Net Debt to Equity (x) Net fixed assets 40,250 47, , ,715 Current ratio (x) CWIP 79,621 79, (1,304) Working capital days Investments 2,847 2,345 2,894 4,212 Inventory & Debtor days Deferred Tax Asset & Loans 3,055 4,554 4,274 4,696 Creditor days Inventory & Receivables 7,577 10,930 10,183 11,178 Interest cover (x) Cash and bank balances ,755 4,678 Valuation metrics Loans and other receivables 888 1,151 1,148 1,148 Fully Diluted shares (mn) Current liabilities 8,551 11,319 11,400 12,100 Fully diluted M. Cap (Rs.mn) 33,111 33,111 Net current assets 858 1,172 5,686 4,904 Fully Diluted EPS (Rs.) Total Assets 126, , , ,247 P/E (x) Cash Flows EV (Rs.mn) 63,199 70,545 64,879 65,255 Cash flows from Operations 3,858 1,483 3,476 3,670 EV/ EBITDA (x) Cash flows from Investing (9,220) (9,860) (436) (923) BV/ share (Rs.) Cash flows from Financing 5,790 7,615 (3,255) (1,925) Price to BV (x) Page 34

35 IRB Infrastructure Consolidated Financial Summary Abridged Financial Statements Key metrics Rs. mn FY14 FY15E FY16E FY17E FY14 FY15E FY16E FY17E Profit & Loss Growth ratios Revenues 37,319 38,475 59,438 79,136 Revenues 1.2% 3.1% 54.5% 33.1% EBITDA 17,537 22,117 27,962 33,552 EBITDA 7.4% 26.1% 26.4% 20.0% Other Income 1,214 1,130 1,019 1,155 PAT -17.5% 18.3% 29.9% 20.4% Depreciation 4,771 7,071 8,531 10,107 Margin ratios EBIT 13,980 16,176 20,450 24,599 EBITDA 47.0% 57.5% 47.0% 42.4% Interest 7,562 9,312 11,279 12,982 PAT 12.3% 14.1% 11.9% 10.7% PBT 6,419 6,864 9,170 11,618 Performance ratios PAT after Minority 4,591 5,429 7,055 8,495 RoA 3.3% 2.0% 1.8% 2.0% Balance Sheet RoE 13.5% 13.7% 15.0% 15.5% Net Worth 35,607 43,609 50,663 59,158 RoCE 7.5% 8.2% 8.8% 8.7% Minority interest Total Assets Turnover (x) Total debt 110, , , ,771 Fixed Assets Turnover (x) Other Liabilities 3, , , ,354 Working capital Turnover (x) Total Networth & Liabilities 149, , , ,624 Financial stability ratios Total Debt to Equity (x) Gross fixed assets 92, , , ,488 Current ratio (x) Net fixed assets 84, , , ,325 Working capital days Goodwill 1,116 1,116 1,116 1,116 Inventory & Debtor days Investments & Long term Loans & Advances 3,098 4,154 9,375 22,860 Creditor days Debtors & Inventories 2,739 2,648 5,591 8,221 Interest cover (x) Cash and bank balances 15,012 15, ,977 Debt to EBITDA (x) Short term Loans & Advances 5,516 4,978 4,978 4,978 Valuation metrics Other current assets Fully Diluted shares (mn) Current liability and provisions 7,319 11,517 17,409 22,415 Fully diluted M. Cap (Rs.mn) 80,834 Net current assets 16,290 12,268 (6,431) (4,878) Fully Diluted EPS (Rs.) Total Assets 149, , , ,624 P/E (x) EV (Rs.mn) 176, , , ,628 Cash Flows EV to sales Cash flows from Operations 6,008 15,594 10,988 21,016 EV/ EBITDA (x) Cash flows from Investing (29,495) (243,706) (55,966) (39,883) BV/ share (Rs.) Cash flows from Financing 26, ,489 29,229 22,943 Price to BV (x) Page 35

36 Sadbhav Engineering Consolidated Financial Summary Abridged Financial Statements Key metrics Rs. mn FY14 FY15E FY16E FY17E FY14 FY15E FY16E FY17E Profit & Loss Revenues 27,325 34,480 42,791 54,070 Revenues 27% 26% 24% 26% EBITDA 4,456 5,867 8,603 12,204 EBITDA 13% 32% 47% 42% Other Income ,739 1,780 PAT 493% -496% -143% 148% Depreciation 1,305 2,235 2,416 2,848 Margin ratios EBIT 3,457 4,075 7,927 11,136 EBITDA 16% 17% 20% 23% Interest 4,555 6,150 5,791 7,195 PAT 2% -5% 2% 3% PBT 120 (1,984) 2,135 3,941 PAT after MI 444 (1,758) 749 1,861 Performance ratios Balance Sheet RoA (%) 0.7% -2.0% 0.7% 1.8% Net Worth + MI 14,263 17,320 29,056 35,153 RoE (%) 3.6% -12.5% 3.6% 6.3% Total debt 54,575 67,030 68,241 69,070 RoCE (%) 3.4% 3.2% 5.5% 7.2% Other Non Current Liabilities 42 22,399 (592) (792) Total Assets Turnover (x) Long term provisions Fixed Assets Turnover (x) Deferred Tax Liability Working capital Turnover (x) Total Networth & Liabilities 69, ,989 97, ,118 Financial stability ratios Gross Fixed assets 57,885 85,493 71,393 91,665 Net Debt to Equity (x) Net fixed assets 53,147 78,520 61,884 79,225 Current ratio (x) CWIP 7,529 17,456 27,459 12,416 Working capital days Investments 1, Inventory & Debtor days Deferred Tax Asset & Loans 3,050 2,402 1,628 4,026 Creditor days Inventory & Receivables 7,396 8,973 11,012 13,989 Interest cover (x) Cash and bank balances 1,280 2,048 1,568 2,310 Valuation metrics Loans and other receivables 5,717 8,239 7,449 7,449 Fully Diluted shares (mn) Current liabilities 9,729 11,348 14,566 16,219 Fully diluted M. Cap (Rs.mn) 50,072 Net current assets 4,664 7,912 5,463 7,529 Fully Diluted EPS (Rs.) 2.8 (10.3) Total Assets 69, ,990 97, ,118 P/E (x) (28.5) Cash Flows EV (Rs.mn) 103, , , ,832 Cash flows from Operations 7,864 5,409 12,277 12,420 EV/ EBITDA (x) Cash flows from Investing (14,578) (36,857) 4,739 (7,629) BV/ share (Rs.) Cash flows from Financing 7,229 29,575 (20,519) (4,139) Price to BV (x) Growth Page 36