Centrum initiates buy on Ashoka Buildcon, target price Rs 180

Centrum has initiated buy rating on Ashoka Buildcon in the long term with a target price of Rs 180. Shares of Ashoka Buildcon gained half a percent to close at Rs 98.15 while the BSE Sensex closed 87.39 points up at 38,214.47.

Company Financials

For the quarter ended 30-06-2019, the company has reported consolidated sales of Rs 1168.14 crore, down -26.85% from last quarter sales of Rs 1596.81 crore and up 21.44% from last year same quarter sales of Rs 961.89 crore. The company has reported net profit after tax of Rs -26.71 crore in the latest quarter.


Investment Rationale

Ashoka Buildcon’s execution, despite a healthy order backlog, continues to be held back by delays in land acquisition. While debt levels are likely to rise, ABL’s leverage at 0.3x D/E and 1.5x debt/EBITDA should remain comfortable, said the brokerage. ABL and SBIMacquarie have initiated the process of monetising their investments in Ashoka Concessions and target to complete it by March 2020.