Prabhudas Lilladher has given Buy recommendation for Ashoka Buildcon with a target price of Rs. 160 in its research report issued on Jun 22, 2021
Prabhudas Lilladher’s research report on Ashoka Buildcon
ASBL’s 4Q performance was healthy with revenues and margins coming above our estimates. Amidst the second wave of Covid, execution was impacted as labour availability and operational efficiency fell to ~70% levels. However, with easing of restrictions and declining cases, operational efficiency bounced back to ~90-95% levels. On the back of healthy order inflows, massive bid pipeline, execution picking up with sharp bounce-back in labour availability, management expects limited impact of second wave on full year FY22 revenues and accordingly retained their earlier guidance of 20- 25% YoY growth in construction revenues in FY22. Delays in conclusion of SBI Macquarie stake sale deal (now expected by 2Q/3QFY22) continues to remain as a major overhang on the stock.
Outlook
We have raised our FY22/23 earnings estimates by 16.4%, 17.6% on the back of lower depreciation and higher other income estimates. At the CMP, the stock trades at an EV of 5.3x/ 5.2x FY22E/ FY23E EBITDA. We maintain ‘BUY’ rating on the stock with a SoTP based TP of Rs160 (Same as earlier).