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What’s the theme?
Ashoka Buildcon (ABL) with an experience of decade in BOT road projects currently has 23 projects under its
portfolio, with 16 projects operational. ABL is amongst the few BOT developers, who has seen a complete life
cycle of project and has handed over four BOT assets back to the govt. ABL also has a strong in-house EPC
arm, which executes captive as well as third party contracts.
What will move the stock?
1) Post IPO, ABL is aiming for the next league with 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 & FY13 in NHAI bidding.
2) No dilution likely in medium term; ABL would require equity of Rs8bn in next three years, which is likely
to come from internal accrual and securitization of existing projects.
Valuation & Recommendation
We value BOT (DCF basis) at equity multiple of 1.6x and 1.1x FY12E and FY13E. Our SOTP based target
price is Rs365, where BOT is valued at Rs220 and EPC division at Rs145 at 9x FY12E earning. We have
a 'BUY' recommendation on the stock.
What will challenge our target price?
1) Further increase in interest rate, would lower IRR; 2) Lower traffic growth; 3) Slowdown in execution of
current orders; 4) Any change in government policy that may adversely affect 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) with an experience of decade in BOT road projects currently has 23 projects under its
portfolio, with 16 projects operational. ABL is amongst the few BOT developers, who has seen a complete life
cycle of project and has handed over four BOT assets back to the govt. ABL also has a strong in-house EPC
arm, which executes captive as well as third party contracts.
What will move the stock?
1) Post IPO, ABL is aiming for the next league with 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 & FY13 in NHAI bidding.
2) No dilution likely in medium term; ABL would require equity of Rs8bn in next three years, which is likely
to come from internal accrual and securitization of existing projects.
Valuation & Recommendation
We value BOT (DCF basis) at equity multiple of 1.6x and 1.1x FY12E and FY13E. Our SOTP based target
price is Rs365, where BOT is valued at Rs220 and EPC division at Rs145 at 9x FY12E earning. We have
a 'BUY' recommendation on the stock.
What will challenge our target price?
1) Further increase in interest rate, would lower IRR; 2) Lower traffic growth; 3) Slowdown in execution of
current orders; 4) Any change in government policy that may adversely affect tolling charges.
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