BUY Ashoka Buildcon Initiating Coverage: Emkay

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Ashoka Buildcon

Reco: BUY

CMP: Rs240

Target Price: Rs337

Stepping into the big league

·      ABL, an integrated BOT developer with 18 BOT projects & Rs83bn assets, is now a formidable national player with 3 NHAI order wins of over Rs 40 bn in the last 18 months

·      ABL boasts of a lucrative cash generating BOT portfolio with weighted average balance life of 22 years and weighted equity IRR of 16%, creating sustainable shareholder value

·      52% of portfolio already operational, another 40% set to commence toll collection in FY12E. Proven track record - 15 year exp. - Rs41.5bn order backlog offers growth visibility

·      EPS set to cruise at 23% CAGR (FY11-13E). ABL trading at an undemanding 11.2x FY12E earnings & 1.14x PB. BUY with SOTP target price of Rs 337, a 40% upside