Prabhudas Lilladher's research report on Ashoka Buildcon
ASBL reported resilient operational performance in a tough scenario with revenues falling 34% YoY due to Covid-19 pandemic, impacting construction activities. Company posted strong margins on the back of reversal of contingency provisions for projects nearing completion. All project sites are currently operational at ~85% efficiency levels, as labour force strongly bounced back to over 90% pre-covid levels. SBI Macquarie stake sale deal continues to remain an overhang on the stock with negotiations likely to restart with prospective buyers, as toll-collections revive to ~90% level. We remain positive on the company given a) its excellent blend of diversified EPC orders and Asset ownership (23 Road assets and 3 City Gas Distribution assets), b) stable EPC margins and c) healthy order book (Rs86.2bn as on 1QFY21) and its foray into new verticals- Railways (10% of order book) and smart cities.
OutlookAt CMP, the stock trades at an EV of 6x/5.1x FY21E/FY22E EBITDA. We maintain BUY rating on the stock with a SoTP based TP of Rs147.
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