Buy Ashoka Buildcon; target of Rs 98: Motilal Oswal

Motilal Oswal is bullish on Ashoka Buildcon has recommended buy rating on the stock with a target price of Rs 98 in its research report dated June 16, 2020.

Broker Research

June 18, 2020 / 07:54 IST

26 Aug, 2025 12:21

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Motilal Oswal 's research report on Ashoka Buildcon

Ashoka Buildcon (ASBL) ended FY20 on a high note with adj. PAT growth of 20%, despite the high base of last year. The company continued to surprise on its performance in the EPC business, with past 3-year revenue/adj. PAT/FCF CAGR of 24%/28%/27%. Gross debt declined by INR3.7b during the year as net working capital cycle improved to 20 days from 51 in FY20. Thus, net D/E improved to 0.1x from 0.4x last year. Order book (OB; incl. L1) stands at INR90b with OB/Rev ratio improving to 2.4x. While we have factored in the weak execution in 1HFY21 due to the COVID-19 related issues, we expect the company to ramp up execution next year owing to its strong balance sheet position.

Outlook

We raise our FY21/FY22E EBITDA estimates by 3%/11% due to strong OB. Standalone EPS estimate revision looks higher at 32%/36% owing to better-than-expected balance sheet improvement. Maintain Buy with revised TP of INR98 (prior: INR92) as we factor in lower toll collection in the BOT portfolio.

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