Buy Ashoka Buildcon; target of Rs 245: Angel Broking

“For 3QFY2012, on a consolidated basis, Ashoka Buildcon (ABL) reported a healthy set of numbers on all fronts, in-line with our estimates. Order book as of 3QFY2012 stood at Rs 4,312cr (4.2x FY2011 E&C revenue) with the company bagging a BOT project (Rs 1,100cr) and power T&D order (Rs 400cr) during the quarter.”

“ABL’s top line witnessed robust growth of 49.3% to Rs 352.9cr, in-line with our estimate of Rs 360.6cr. The E&C segment witnessed strong yoy growth of 52.8% to Rs 300.4cr, higher than our expectation of Rs 268.4cr, while the BOT segment reported 30.1% yoy growth to Rs 66.3cr, lower than our estimate of Rs 92.2cr. On the EBITDAM front, ABL’s margins came at 19.6%, lower than our estimate of 21.3%, owing to lower margins in the BOT segment, led by major and regular maintenance work in two projects. Interest cost came in at Rs 27.3cr, a jump of 70.6% yoy/10.9% qoq. Despite lower EBITDAM, ABL posted decent performance at the earnings level, owing to robust top-line growth and reported PAT growth of 17.3% to Rs 19.5cr, in-line with our estimate of Rs 21.0cr.”

“NHAI has done a commendable job by handing out ~4,500km so far in the current fiscal and is looking on track to achieve 80% of its target of awarding, ~7,300km in FY2012. Further, in the long run, the road segment continues to offer a number of opportunities for road-focused players such as ABL. We have valued ABL on an SOTP basis – by assigning 5.0x EV/EBITDA to its standalone business (Rs 104/share) and valued its BOT projects on NPV basis (Rs 141/share) to arrive at a target price of Rs 245, which implies an upside of 26.4% from current levels. We maintain our Buy rating on the stock with a target price of Rs 245,” says Angel Broking research report.

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