Ashoka Buildcon Ltd. share price target

Ashoka Buildcon (Ashoka) reported a weak Q1FY26 with execution impacted amid early monsoons. As a result, revenue came in at INR 13bn (-30% YoY), its lowest in the last 10 quarters.

Ashoka has entered into an agreement to sell its BOT asset to India Highway Concession Trust – sponsored by CDPQ, a Canadian pension fund. Ashoka shall receive INR 25bn as the deal’s proceeds.

Ashoka Buildcon’s (Ashoka) pivot to diversifying its orderbook is not yielding the warranted results. In Q1FY25, operating margin declined 180bps YoY.

Diversified order book, decent execution capabilities, expected pick-up in execution and focus on debt reduction and working capital are expected to outline ABL's performance over the next few years...

Ashoka Buildcon (ASBL) Q2FY22 (standalone) revenue and EBITDA came lower than our and consensus estimate. This is led by delay in execution due to heavy monsoon. At EBITDA level, result is lower than our and consensus estimate by 15%. ASBL has revenue guidance at 20% YoY increase for FY22E and margins at ~12-12.5%. H1FY22 Order book at Rs120bn (equals 3x TTM Revenue) with Roads & Railway at 68%. YTDFY22 total order inflow was strong at Rs33.5bn. We have introduced FY24E and roll forward TP at Rs135 (exhibit 8). Maintain BUY. ASBL has renegotiated the terms of shareholders agreement regarding the Investors exit options from the proceeds of the...

of roads and bridges having an integrated portfolio of EPC, BOT and HAM projects. Besides roads construction, ABL also has an established presence across varied infra verticals such as power transmission, railways, city gas distribution. Diversified order book, decent execution capabilities, expected pick-up in execution, and focus on debt reduction and working capital are expected to outline ABL's performance over the next few years...

The current order book stands at ~INR119b. Roads HAM/EPC projects contributed INR28b/INR45b to the order book, while Buildings EPC and Power T&D contributed INR19b each. Railways contributed INR8b. The total order book inflow stands at INR3.4b for YTD....

Ashoka Buildcon (ASBL) Q1FY22 standalone PAT came 19%/ 25% higher than our / consensus estimate. This is led by better execution as work efficiency improved and currently operating at 100% efficiency level. On execution front, company has guided for revenue increase of 25% with EBITDA margin of 12-12.5% for FY22E. Post the result we have increased revenue to 20% YoY pa for FY22E/23E. This has resulted in increase in the EPS by 4% and 6% for FY22E and FY23E respectively. And SOTP base TP is revised to Rs135 (earlier Rs128), TP implied valuation is at 7x FY23E EPS (last 5 years avg at 12x). Catalyst for stock performance is conclusion of ACL asset sale, execution...

Diversified order book, decent execution capabilities, expected pick-up in execution and focus on debt reduction, working capital are expected to outline ABL's performance over the next few years...

We remain positive on the company given a) its excellent blend of diversified EPC orders and Asset ownership (in 23 Road assets and 3 City Gas Distribution assets), b) stable EPC margins and c) healthy order book (Rs94.7bn as at 1QFY22) and foray into new verticals i.e. Railways (8% of order book) and EPC buildings (13%). We expect revenue/PAT CAGR of 9.2%/1.4% for FY22/23E respectively. At the CMP, the stock trades at an EV of...