Share Review Ashoka Buildcon : Target Price Rs.273

For 4Q FY 2012, on a consolidated basis, Ashoka Buildcon (ABL) reported a decent set of numbers (adjusting for impact of change in accounting policy in 4Q FY2 011).

Order book as of 4Q FY 2012 stood at Rs.4,967 crore (3.9x FY2012 E&C revenue), providing revenue visibility. As per management, the PE deal of Rs.700 crore to Rs. 800 crore for funding its equity requirement of under-construction projects is expected by the end of 1Q FY 2013.

We maintain our Buy rating on the stock. Revenue and EBITDAM in-line, lower depreciation leads to higher-than-expected

Profit after Tax (PAT)

 

ABL’s top line witnessed decent growth of 16.9 % (excluding Rs. 200 crore revenue in 4Q FY 2011 owing to change in accounting policy) to Rs. 468 crore, marginally lower than our estimate of Rs .495 crore.

On the EBITDAM front, ABL’s margin came in at 20%, 0.3% lower than our estimate of 20.3 %. At the earnings front, ABL reported decent growth of 21.9 % (excluding exceptional income of Rs.107 crore in

4Q FY 2011) to Rs. 47 crore, which was higher than our estimate of Rs. 34 crore owing to lower depreciation.

During the quarter, ABL changed its depreciation policy, resulting in lower depreciation for the quarter. Outlook and valuation: ABL needs to infuse equity worth  about Rs.1,100 crore (including Cuttack Angul project) for its under-construction/development road BOT projects.

Further, as per management, ABL is at an advanced stage of roping in a strategic investor for investment of Rs. 700 crore to 800 crore in the holding company (eight road projects) and expects the deal to happen by the end of 1Q FY 2013.

We believe conclusion of this deal would be positive for the company as it would not only aid

ABL to put in current equity requirement but also provide legroom for more wins in the future. However, valuation at which the deal is concluded would be an important thing to look out for. We maintain our Buy recommendation on the stock with an SOTP target price of Rs .273. (Investment Period 12 Months)

Review By Angel Broking

Nitin Arora

022-39357800 Ext: 6842

nitin.arora@angelbroking.com

Angel Broking

 6^th Floor, Ackruti Star, Central Road,MIDC

Andheri (E) , Mumbai-93 Main : (91-22) 3935 7600 Extn : 6956

Website : www.angelbroking.com

 

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