Prabhudas Lilladher is bullish on Ashoka Buildcon has recommended buy rating on the stock with a target price of Rs 147 in its research report dated June 16, 2020.
Prabhudas Lilladher's research report on Ashoka Buildcon
ASBL reported strong performance in 4Q with healthy execution in its key projects leading to meagre ~4% YoY (PLe: -35% YoY) fall in revenues, despite nationwide lockdown. Post relaxations in lockdown almost all projects have commenced operations and are currently operating at ~60% efficiency levels. Further, the company has not witnessed any delays in payments from Central authorities (including NHAI & Railways) in 4QFY20 as well as during April & May 2020. Labour availability (ranging from 50-65% across projects) would be the next key monitorable for pickup in execution pace. 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 (Rs83.8bn as on 4QFY20) and its foray into new verticals- Railways (11% of order book) and smart cities.
Outlook
At CMP, the stock trades at an EV of 5.8x/4.9x FY21E/FY22E EBITDA. We maintain BUY rating on the stock with a SoTP based TP of Rs147.
For all recommendations report, click here
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