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Equirus Securities
Ashoka
Buildcon (Long)
CMP: ₹189.45
Target: ₹276
Ashoka Buildcon is one of the largest highway developers in the country with an impressive portfolio of over 31 PPP (Public Private Partnership) projects. Ashoka Buildcon is present across nine States executing several prestigious projects for the Centre and State governments. The company is also active in power transmission and distribution sector with various power projects in Maharashtra, Chattisgarh, Tamil Nadu and Bihar.
Ashoka Buildcon’s (ASBL) saw strong execution ramp-up during 1Q18. Its current order book stands at ₹6,400 crore and order book/TTM ratio at 2.8x, giving us confidence on the company achieving 20 per cent revenue CAGR over FY17-FY20E. Toll collections grew 14 per cent y-o-y with most projects seeing decent traffic growth.
We expect new HAM project wins, sale of SBI Macquarie stake and steady EPC performance to be key stock re-rating triggers. We maintain ‘Long’ with a SOTP-based September 2018 target price of ₹276 (June 2018 TP of ₹255 earlier).
Key risks are weak execution and unrelated diversification.
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