9 ASHOKA share price target reports by brokerages below. See what is analyst's view on ASHOKA share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
ASBL reported strong performance in 4Q with healthy execution in its key projects leading to meagre ~4% YoY (PLe: -35% YoY) fall in revenues, despite nationwide lockdown. Post relaxations in lockdown almost all projects have commenced operations and are currently operating at ~60% efficiency levels. Further, the company has not witnessed any delays in payments from Central authorities (including NHAI & Railways) in 4QFY20 as well as during April & May 2020. Labour availability (ranging from 50-65% across projects) would be the next key monitorable for pickup in execution pace. We remain positive on the company given a) its excellent blend of diversified EPC orders and Asset ownership (23 Road assets and 3 City Gas Distribution assets), b) stable EPC margins and c) healthy order book (Rs83.8bn as on 4QFY20) and its foray into new verticals- Railways (11% of order book) and smart cities. At CMP, the stock trades at an EV of 5.8x/4.9x FY21E/FY22E EBITDA. We maintain BUY rating on the stock with a SoTP based TP of Rs147.
We remain positive on the company given a) its excellent blend of diversified EPC orders and Asset ownership (23 Road assets and 3 City Gas Distribution assets), b) stable EPC margins, c) healthy order book (Rs80.9bn as on 3QFY20). Equity requirement in HAM Projects would be ~Rs4.5bn over next two-three years which the management believes would be funded through internal accruals. ASBL is one of the few companies in infra space successfully diversifying into new verticals such as Railways (13% of order book) and smart cities (maiden order Rs3.2bn) over a period of time. In ourview, ACL’s asset monetisation would a key monitorable and if concluded within a year would remove the overhang on the stock. At CMP, the stock trades at an EV of 5.8x/5.7x FY20E/FY21E EBITDA. We maintain BUY rating on the stock with a SoTP based TP of Rs167.
Though softened from Q1, Ashoka’s Q2 growth was still good, coming in the backdrop of the heavy monsoons. With the rains now past, and as work gets going at the two recently appointed hybrid annuity and the recent additions, growth ahead is expected to be healthy. The balance sheet, too, is in shape to ensure growth doesn’t falter for want of funds. Inflows could have been better; the expected year-end spurt in awarding should help. In the BOT toll segment, the monsoon added to constrained economic activity, and to a project-specific issue. On the sturdy balance sheet and benign valuations, we retain our Buy rating.
We maintain BUY on ABL with reduced SOTP of Rs 220/sh. We have cut our standalone EPC multiple from 15x to 12x to factor in concerns surrounding ACL monetization and likely impact on ABL stake dilution in ACL below 61%, in case of suboptimal valuation bids.
Our sum-of-parts-based target price of Rs 180 is derived using a 14x PE multiple for FY21e construction earnings (Rs 125 a share), a discounted- cash-flow-driven valuation for the road-asset portfolio (Rs 53) and book value for investments in the CGD.
ABL’s strong track record, comfortable orderbook position, financial closure for HAM projects and huge opportunities ahead make us positive onAshoka’s long term prospects. With ABL expected to receive appointed date for remaining three projects soon, we see a significant ramp up in execution, going ahead. Hence, we expect EPC revenues to grow robustly at 17.5% CAGR to Rs 5,277.8 crore. We continue to maintain our BUY recommendation on the stock with an SoTP-based target price of Rs 175. While SBI Macquarie may remain an overhang in the near term, ABL is currently trading at attractive valuation of 11.9x FY20E EPC business earnings.
We cut our earnings estimate by 7%/9% for FY20/21 to factor in (a) delay in execution pick-up of three HAM projects where appointed date is yet to be received, and (b) the higher interest cost given the rise in debt (taken for the WC and equipment loan purpose). We maintain our Buy rating with SOTP-based TP of INR175.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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