Motilal Oswal has given Buy recommendation for Ashoka Buildcon recommended buy rating on the stock with a target price of Rs 160 in its research r with a target price of Rs. 160 in its research report issued on Aug 12, 2021
Motilal Oswal’s research report on Ashoka Buildcon
ASBL’s demonstrated strong operating performance, with 1QFY22 revenue growth of ~77% YoY (38% ahead of our estimate). EBITDA came in at INR1.2b, 49% ahead of our estimate, led by a higher revenue and EBITDA margin (90bp above our expectation). As a result of lower depreciation and higher other income v/s our estimate, adjusted PAT came in at INR1b, 123% ahead of our expectation. Including L1 orders of INR10.3b, OB stood ~INR105b, with an OB/revenue ratio of ~2.5x, providing comfort on revenue growth. The management’s major focus in the future will be on Roads/Highways, with a share of 70-75% of the order book and 25-30% for Building and other segments. The strong execution over the past two years is commendable. The pending exit of the private equity investor in its asset portfolio is an overhang on the stock. A strong order book, coupled with a healthy ordering outlook and continuous improvement in the Balance Sheet, augurs well for ASBL.
We increase our FY22E/FY23E EPS estimate by 24%/23% and TP to INR160/share. We maintain our Buy rating.