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What’s the theme?
Ashoka Buildcon (ABL) has experience of over a decade in BOT road projects. It has 23 projects in its portfolio
of which 16 are operational. ABL is among the few BOT developers who have seen complete life cycle of a
project. It has handed over four BOT assets back to the government. ABL also has a strong in-house EPC arm,
which executes in-house as well as third-party contracts.
What will move the stock?
1) Post IPO, ABL aims to be in the next league with an aggressive but calculated bidding strategy. In
FY11, ABL has won projects worth more than Rs30bn. We expect ABL to maintain its market share of
3.5% for FY12 and FY13 in NHAI bidding.
2) No dilution likely in the medium term; ABL would require equity of Rs8bn in next 3 years, which is likely
to come from internal accruals and securitization / stake sale of existing projects.
Valuation & Recommendation
We value ABL's BOT project (DCF basis) at equity multiple of 1.6x and 1.1x FY12E and FY13E. Our
SOTP-based target price is Rs363, with BOT valued at Rs208 and EPC at Rs155 at 9x FY12E earnings.
We have a 'BUY' recommendation on the stock.
What will challenge our target price?
1) Further increase in interest rate lowering IRR; 2) Lower traffic growth; 3) Slowdown in execution of
current orders; 4) Any change in government policy adversely affecting tolling charges
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
What’s the theme?
Ashoka Buildcon (ABL) has experience of over a decade in BOT road projects. It has 23 projects in its portfolio
of which 16 are operational. ABL is among the few BOT developers who have seen complete life cycle of a
project. It has handed over four BOT assets back to the government. ABL also has a strong in-house EPC arm,
which executes in-house as well as third-party contracts.
What will move the stock?
1) Post IPO, ABL aims to be in the next league with an aggressive but calculated bidding strategy. In
FY11, ABL has won projects worth more than Rs30bn. We expect ABL to maintain its market share of
3.5% for FY12 and FY13 in NHAI bidding.
2) No dilution likely in the medium term; ABL would require equity of Rs8bn in next 3 years, which is likely
to come from internal accruals and securitization / stake sale of existing projects.
Valuation & Recommendation
We value ABL's BOT project (DCF basis) at equity multiple of 1.6x and 1.1x FY12E and FY13E. Our
SOTP-based target price is Rs363, with BOT valued at Rs208 and EPC at Rs155 at 9x FY12E earnings.
We have a 'BUY' recommendation on the stock.
What will challenge our target price?
1) Further increase in interest rate lowering IRR; 2) Lower traffic growth; 3) Slowdown in execution of
current orders; 4) Any change in government policy adversely affecting tolling charges
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