In early morning trading on Tuesday, November 19, shares of Ashoka Buildcon, a business that builds infrastructure and works on an EPC and BOT basis, increased by 7% to ₹245 per share. The stock rose after the company announced that it had received orders totalling ₹2,791 crores from the National Highways Authority of India (NHAI).
Through an exchange filing on Monday, the company notified investors that it had won two EPC projects from the NHAI in West Bengal under the Hybrid Annuity Model (HAM) at the lowest possible bid.
Using the Hybrid Annuity Mode, the first project entails building a 4-lane economic corridor along NH 116A in West Bengal from Kharagpur to Chandrakona Ghatal Road Crossing (km 0.000 to km 41.000). The project’s total cost, GST excluded, is ₹1,400 crore.
The second project, valued at ₹1,391 crore, is focused on creating a 4-lane Economic Corridor along NH 116A in West Bengal, from Bowaichandi to Guskara Katwa Road (km 89.814 to km 133.000), using the Hybrid Annuity Mode.
Due to poorer execution brought on by the strong monsoon, the company’s Q2FY25 results lagged behind street projections. Its EBITDA and standalone sales fell 17% and 9% year over year (YoY) to ₹120 crore and ₹1,400 crore, respectively.
Due to rising debt levels, interest costs increased substantially by 34% YoY to ₹70.6 crore, while EBITDA margins shrank by 80 basis points YoY to 8.4%. The adjusted PAT was 48.8 crore.
Citing poor performance in H1FY25, the company has changed its sales growth target for FY25E from 15-20% to flat YoY. However, thanks to high inflows of ₹7,100 crore this year and a solid bid pipeline, it has maintained its inflow projection of ₹10,000–12,000 crore.
The local brokerage firm JM Financial estimates that as of September 2024, the order backlog was ₹11,100 crore (1.4 times TTM revenue). With the receipt of LoA for orders totalling ₹4,300 crores in October 2024, the backlog is anticipated to improve in Q3 FY25.
“Company entered into SPA with Indian Highway Concessions to sell 5 BOT assets at an equity valuation of ₹2,540 crore (much better than the earlier valuation of ₹1,340 crore). ABL will receive net proceeds of ₹860, which will be used to pay debt. ABL also targets to monetize 11 HAMs in FY25E, while that for Chennai ORR and Jaora Nayagaon remains delayed,” said the brokerage.
With a target price of ₹300 per share, the brokerage maintained its ‘buy’ rating on the company.
The stock had selling pressure in the months that followed a robust run from May 2023 to July 2024, when it gained 240%. This tendency is still evident this month. It is currently trading 17% lower than its most recent peak of ₹284.75.
