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Ashoka Buildcon is fast transforming from a pre-dominantly state road BOT player concentrated in central & western India to a pan-India player with National Highways contributing in a major way to its road BOT portfolio. We expect its operational lane kms to rise from 1455kms in FY11 to 4240kms in FY15. Also, its existing portfolio is a cash cow with most of its operational roads being able to re-leverage which is unheard of amongst its peers enabling investment in growth opportunities without dilution. Its experience in execution has helped it deliver projects on or before time lending credibility to its EPC execution skills. We expect Ashoka Buildcon to register a revenue & net profit CAGR of 30% & 16% over FY11-14E. The company looks attractive based on both NPV & earnings multiples. We initiate coverage on Ashoka Buildcon with a Buy recommendation and a target price of ` 251.
Rapid transformation to a national player
Ashoka Buildcon has within a span of last 4 years scaled up its BOT road portfolio from 2105 lane kms to 4708 lane kms today. Currently, 2105 lane kms are operational with state projects contributing 65%. We expect major NH projects to be operational over FY14E-15E taking the operational lane kms to 4240 lane kms with NH’s contributing 68%. We expect revenue & EBIDTA to grow at a CAGR of 30% & 16% respectively over FY11-14E.
Right mix within portfolio; new wins concentrated on NH-6
We believe Ashoka Buildcon’s road portfolio has a right mix with its low capital state projects delivering high growth and are cash cow to the group while new NH project wins are concentrated on NH6 which connects resource rich east to industrialized western India & a long concession period captures the potential for long term growth opportunity of this route.
Strong orderbook; captive projects to drive growth
Ashoka Buildcon has more than a decade experience in road construction. We expect execution of its current order book stands of ` 43.1bln, 86% of which is captive to drive revenue growth of 30% over FY11-14E. Although, the equity funding for the pojects is not tied up we expect the company to raise resources through private equity funding
Valuation
At CMP of ` 196, the company is trading at 1.0x FY12E & 0.9x FY13E P/BV & 7.8x FY12E & 7.9x FY13E EV/EBIDTA respectively. A sizeable order book, and expansion of BOT portfolio firmly places the company on a higher growth trajectory. We initiate coverage with a Buy recommendation and a price target of ` 251. Key risks to our recommendation include shortfall in funding of its BOT projects and/or higher than expected dilution of its BOT road portfolio to PE investors.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ashoka Buildcon is fast transforming from a pre-dominantly state road BOT player concentrated in central & western India to a pan-India player with National Highways contributing in a major way to its road BOT portfolio. We expect its operational lane kms to rise from 1455kms in FY11 to 4240kms in FY15. Also, its existing portfolio is a cash cow with most of its operational roads being able to re-leverage which is unheard of amongst its peers enabling investment in growth opportunities without dilution. Its experience in execution has helped it deliver projects on or before time lending credibility to its EPC execution skills. We expect Ashoka Buildcon to register a revenue & net profit CAGR of 30% & 16% over FY11-14E. The company looks attractive based on both NPV & earnings multiples. We initiate coverage on Ashoka Buildcon with a Buy recommendation and a target price of ` 251.
Rapid transformation to a national player
Ashoka Buildcon has within a span of last 4 years scaled up its BOT road portfolio from 2105 lane kms to 4708 lane kms today. Currently, 2105 lane kms are operational with state projects contributing 65%. We expect major NH projects to be operational over FY14E-15E taking the operational lane kms to 4240 lane kms with NH’s contributing 68%. We expect revenue & EBIDTA to grow at a CAGR of 30% & 16% respectively over FY11-14E.
Right mix within portfolio; new wins concentrated on NH-6
We believe Ashoka Buildcon’s road portfolio has a right mix with its low capital state projects delivering high growth and are cash cow to the group while new NH project wins are concentrated on NH6 which connects resource rich east to industrialized western India & a long concession period captures the potential for long term growth opportunity of this route.
Strong orderbook; captive projects to drive growth
Ashoka Buildcon has more than a decade experience in road construction. We expect execution of its current order book stands of ` 43.1bln, 86% of which is captive to drive revenue growth of 30% over FY11-14E. Although, the equity funding for the pojects is not tied up we expect the company to raise resources through private equity funding
Valuation
At CMP of ` 196, the company is trading at 1.0x FY12E & 0.9x FY13E P/BV & 7.8x FY12E & 7.9x FY13E EV/EBIDTA respectively. A sizeable order book, and expansion of BOT portfolio firmly places the company on a higher growth trajectory. We initiate coverage with a Buy recommendation and a price target of ` 251. Key risks to our recommendation include shortfall in funding of its BOT projects and/or higher than expected dilution of its BOT road portfolio to PE investors.
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