Broker’s call: Ashoka Buildcon (Buy)

Target: ₹206

CMP: ₹161.55

We did site visit of Ashoka Buildcon’s (ASBL) MOPA airport link road (ALR) project and interacted with its management.

ALR project is 82 per cent complete and its commissioning is expected by March-24 versus MORTH guideline of Aug-24. ASBL’s asset monetisation for 9 HAM project is in advance stage and SPA is expected by FY24. However, for BOT asset (Chennai ORR, Nayagaon) NOC approval is awaited and transaction is getting delayed to FY25.

Conclusion of asset monetisation is expected to reduce debt which is ₹7,200 crore at consolidated basis. We maintain our positive view on the stock as EBITDA margin is getting stabilised and H1FY24 order book of ₹14,800 crore equals to 2x FY24 revenue.

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Other key takeaways are Ministry is moving to awarding road asset in BOT mode vs HAM/EPC till now; International EPC project contribute 6-7 per cent to ASBL top line and ASBL is bidding for new projects. And it expects international revenue contribution to increase from current level. Though it abstained by giving number and is awaiting receipt of EPC orders.

Retain buy rating on the stock with revise SOTP base TP of ₹206 as we roll forward to FY26E (earlier TP of ₹191)

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