Ashoka Buildcon gains 5% on receiving LOA from NHAI for Rs 726 cr project

The company has received letter of acceptance from NHAI for development of Memmadpur (Ambala) - Banur (IT City Chowk) - Kharar (Chandigarh) Corridor for a bid price of Rs 726 crore

Shares of Ashoka Buildcon rose 5 per cent to Rs 117.15 on the BSE in intra-day trade on Tuesday after the company said it has received letter of acceptance (LOA) from National Highways Authority of India (NHAI) for the development of Memmadpur (Ambala) - Banur (IT City Chowk) - Kharar (Chandigarh) Corridor for a bid price of Rs 726 crore.

The stock of the roads and highways construction company was trading close to its 52-week high of Rs 118.65 touched on February 17, 2021. At 09:41 am, the scrip was quoting at Rs 114.80, up 3 per cent on the BSE, as compared to a 0.41 per cent gain in the S&P BSE Sensex. A combined 2.4 million equity shares had changed hands on the counter on the NSE and BSE at the time of writing this report.

In the past three months, Ashoka Buildcon has outperformed the market by surging nearly 30 per cent as against a 8.5 per cent rise in the S&P BSE Sensex.

As on March 31, 2021, total order book of the company stood at Rs 8,167 crore, excluding orders worth Rs 1,949 crore which includes LOA received for Maldives EPC (engineering, procurement, and construction) project, G-RIDE project and L-1 for Punjab EPC road project. Of the total order book, contribution from roads HAM (hybrid annuity model) and roads EPC is Rs 3,471 crore and Rs 2,712 crore, respectively; power T&D and others is at Rs 1,376 crore, railways at Rs 537 crore and CGD contributes the rest.

“Ashoka Buildcon has guided revenue to increase by 20 per cent year on year (YoY) in FY22E, as labour efficiency has increased to ~90-95 per cent in Q1FY22. Order book at Rs 101 billion (3x TTM revenue) provides revenue visibility and incremental order inflow is expected at Rs 70 billion in FY22E. ACL asset monetization has gathered pace and the company plans to sell road assets on a piecemeal basis. Though this could take time, we believe this could see monetisation of ACL portfolio,” analysts at IDBI Capital said in the March quarter result update.