Ashoka Buildcon jumps 15%, hits over 9-month high on strong growth outlook

In the past one month, the stock has rallied 56 per cent.

Shares of Ashoka Buildcon moved higher by 15 per cent to Rs 99.25 on the BSE in intra-day trade on Monday on the back of heavy volumes on the expectation of a strong growth outlook. The stock of roads and highways company hit an over nine-month high, and was quoting at its highest level since February 22, 2020. It had touched a 52-week high of Rs 121.60 on January 22, 2020.

At 01:20 pm, Ashoka Buildcon was trading at Rs 98.20, up 13 per cent on the BSE, as compared to a 0.62 per cent rise in the S&P BSE Sensex. A combined 6.1 million equity shares changed hands on the NSE and BSE.

In the past one month, the stock has zoomed 56 per cent after the company reported a healthy 44 per cent year-on-year (YoY) jump in its standalone net profit at Rs 105 crore for the September quarter (Q2FY21), on the back of robust operational performance with lower interest expenses and tax outgo. EBITDA (earnings before interest, taxes, depreciation, and amortisation) was up 11.5 per cent YoY at Rs 181 crore, while EBITDA margin expanded 70 basis points YoY at 19.5 per cent, backed by benign raw material cost. Standalone revenue was up 7.7 per cent YoY at Rs 927 crore.

The company said its total order book as of September 30, 2020, stands at Rs 9,300 crore. Of the total order book, the contribution from the road hybrid annuity model (HAM) and road engineering, procurement, and construction (EPC) is Rs 4,323 crore and Rs 3,247 crore, respectively.

Brokerage firm Sharekhan has retained a "Buy" rating on Ashoka Buildcon with a revised price target of Rs 110, considering its attractively valued EPC business and improving outlook on toll projects. The brokerage said that the analysts' interaction with the management suggests a normal pace of execution for projects and improving toll collections during November.

"The management retained revenue and order intake guidance for FY2021. Project awards and construction for FY2021 till October continue to see improvement. FASTag collection continued the growth momentum in November. Factoring  Ashoka Buildcon’s investments in Ashoka Concessions (ACL) and owned assets including real estate, the EPC business is grossly undervalued," the brokerage added.