Buy Ashoka Buildcon, target price Rs 140: HDFC Securities

HDFC Securities has buy call on Ashoka Buildcon with a target price of Rs 140. The current market price of Ashoka Buildcon Ltd. is Rs 73.2. Time period given by analyst is one year when Ashoka Buildcon Ltd. price can reach defined target.

Ashoka Buildcon Ltd., incorporated in the year 1993, is a Mid Cap company (having a market cap of Rs 2052.09 Crore) operating in Infrastructure sector.

Ashoka Buildcon Ltd. key Products/Revenue Segments include Income From Construction Work, Ready Mix Concrete, Other Operating Revenue and Scrap for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 2056.99 Crore, up 39.42 % from last quarter Total Income of Rs 1475.38 Crore and up 15.55 % from last year same quarter Total Income of Rs 1780.22 Crore. Company reported net profit after tax of Rs 220.89 Crore in latest quarter.

Investment Rationale
Ashoka Buildcon (ASBL) reported revenue/EBITDA/APAT of INR 15.6/1.6/1.8bn, an EBITDA miss on estimate. EBITDA margin is expected to remain in 11-12% range in FY23, led by softening raw material prices and high proportion of variable priced orders (~90% of the OB). The Chennai ORR sale deal with NIIF is expected to fetch INR 4.5bn for ASBL and it is targeted to complete by Q2FY23. The 5 ACL BOT sale worth INR 13.4bn is expected to conclude by Sep-22 and the Jaora BOT asset sale is expected in FY23. ASBL secured the highest-ever order inflow of INR 87.1bn in FY22. Including the recently-won orders, the order book (OB) stands at INR 146.3bn. The company expects FY23 revenue growth of 20-25% YoY. It maintains BUY, with a reduced TP of INR 140/sh (9x Mar-24E EPS), to factor in lower-than-expected ACL BOT’s monetisation value.

Promoter/FII Holdings
Promoters held 54.48 per cent stake in the company as of 31-Mar-2022, while FIIs owned 2.13 per cent, DIIs 21.48 per cent.