Buy Ashoka Buildcon, target Rs 329: Emkay Global Financial Services

Emkay Global Financial Services has a buy call on Ashoka Buildcon Ltd. with a target price of Rs 329. The current market price of Ashoka Buildcon Ltd. is Rs 231.95 Time period given by the brokerage is a year when Ashoka Buildcon Ltd. price can reach defined target. .Ashoka Buildcon Ltd., incorporated in1993, is a midcap company with a market cap of Rs 4436.36 crore.

Investment rationale by Emkay Global

 Ashoka Buildcon (ASBL) reported sales of Rs7.0bn (Emkay Est: Rs7.6bn), led by strong execution in its key projects. EBITDA came in at Rs807.4mn while OPM stood at 11.5% (Emkay Est: 13.2%).

 The company witnessed healthy traffic growth of ~11% (on like-to-like basis) across its key BOT projects, mainly led by pick-up in economic activity and a low base.


 ASBL’s order book stands at Rs119.1bn (~5x its FY18 EPC revenue). Backed by an impressive order book and proven execution capabilities, ASBL has given a strong revenue growth guidance of 40% over FY18-20E with EBITDA margin in the range of 13-13.5%.

 We continue to maintain BUY rating and SOTP TP of Rs329 (Rs312 earlier). The TP includes Rs261 for the standalone EPC business at 18x FY20E EPS