Buy Ashoka Buildcon; target of Rs 180: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Ashoka Buildcon

Ashoka Buildcon’s (ABL) topline de-grew 2.6% YoY to Rs 683.7 crore (our estimate: Rs 865.2 crore) despite a strong order book (OB). As on Q1FY19, the company’s OB was at Rs 10783 crore EBITDA margins contracted 148 bps YoY to 11.9% (our expectation: 12.5%) due to higher employee expenses (4.5% as percentage of revenue in Q1FY19 vs. 3.7% of revenue in Q1FY18) PAT grew 3.1% YoY to Rs 63.9 crore (our estimate: Rs 75.0 crore) mainly on account of higher tax expenses (26.7% as a percentage of revenue in Q1FY19 vs. 24.9% in Q1FY18).

Considering the strong track record, robust orderbook, well-funded BOT project portfolio and huge opportunities ahead, we stay positive on Ashoka’s long term prospects. Hence, we expect EPC revenues to grow robustly at 29.7% CAGR to Rs 4156.2 crore. There has even been a strong revival in traffic growth across its project portfolio, which is expected to be sustainable, going forward. We continue to maintain our BUY recommendation with an SoTP based target price of Rs 180/share. We value ABL’s BOT projects at Rs 26.5/share, EPC business (net of debt) at Rs 111.7/share (7.0x FY20E EV/EBITDA) and ACL at Rs 42.3/share.

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