Sharekhan's research report on Ashoka Buildcon
Q1FY2023 standalone execution beat estimates while OPM disappointed due to higher share of low margin EPC revenues. Order inflows remained strong during FY2023 till date; Current, OB stands at 3x its TTM standalone revenue. Management targets over Rs. 6,000 crore to Rs. 8,000 crore order inflow for the balance FY2023. It lowered standalone revenue growth to 15-20%, and OPM to 9-10% for FY2023. The SBI Macquarie exit along with completion of divestment in BOT assets in H2FY2023 would lead to over 40% reduction in consolidated debt.
Outlook
We retain Buy on Ashoka Buildcon Limited (Ashoka) with a revised PT of Rs. 100. The EPC business is significantly undervalued even after adjusting for HAM equity investments at 0.5x its P/B and realty assets at 1x its P/B.
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