‘Buy’ This Infra Stock For 52.4% Upside With A CMP Of Rs. 103: HDFC Securities

Company performance

Ashoka Buildcon (ASBL)’s revenue was Rs. 9.2bn (+5%/-9% YoY/QoQ), EBITDA stood at Rs. 1.05bn (-19% YoY, -12% QoQ), with an EBITDA margin at 11.5% (-244/-265 bps YoY/QoQ). The company additionally reported a PAT of Rs. 0.9bn. The company’s execution was subdued, largely on account of the monsoon. Including the recently-won orders, the order book (OB) stands at Rs. 120bn. The company has reduced its FY22 revenue growth guidance from 25% to 20%. The SBI Macquarie deal was renegotiated earlier in Oct-21 for consideration of a minimum of Rs. 11bn, with Dec-21 as the deadline for completion.

Comments by HDFC Securities

According to HDFC Securities, the company had a “Subdued quarter. We maintain BUY and cut our EPS along with TP to Rs. 157 (9x Sep-23E EPS), given the cut in guidance and higher share in the mix from EPC orders vs HAM. This may lower the EBITDA margin as HAM projects have higher margins.”

About the company

Ashoka Buildcon is a leading construction and highway developer in India. Ashoka Buildcon is an integrated EPC, BOT & HAM player in the country, with a portfolio of a major 39 PPP projects. The company has operated in more than 20 states across India, completing projects for Central and State Governments.

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.