Buy Ashoka Buildcon; target of Rs 160: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Ashoka Buildcon

ASBL’s 3Q performance was muted with revenues and margins coming below our and street estimates, mainly due to delayed commencement of 3 major projects. ASBL now received long-awaited AD in Kandi Ramsanpalle HAM project and expects AD for one more project within a month or so. On the back of strong toll collections (up 12% YoY in 3Q), labour force at pre-covid levels, commencing operations in new projects and strong order inflows guidance, execution momentum will remain strong going ahead. Also conclusion of negotiations in SBI Macquarie stake sale deal (expected by Mar’21) will remove a major overhang on the stock. We remain positive on the company given a) its excellent blend of diversified EPC orders and Asset ownership (in 23 Road assets and 3 City Gas Distribution assets), b) stable EPC margins and c) healthy order book (Rs91.5bn as at 3QFY21) and foray into new verticals- Railways (8% of order book) and smart cities. Given healthy margin profile & sharp V-shaped recovery in BOT segment, we have increased our EPS estimates from (Rs3)/ Rs2.7/ Rs2.6 to Rs7.5/ Rs8.2/ Rs8.5 for FY21E/22E/23E respectively.

Outlook

At CMP, the stock trades at an EV of 6x/ 5.5x FY21E/ FY22E EBITDA. We roll over to FY23 estimates and maintain BUY rating on the stock with a revised SoTP based TP of Rs160 (Earlier Rs147).

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