Scripscan:Ashoka Buildcon Ltd
cmp:238
Code: 533271
Story:ABL is one of the premier road developers in India, having a sizeable network of road assets across 18 projects (Rs83 bn of asset size) covering ~1,036 kms. 12 projects are already operational (~538 kms or 52% portfolio) generating CFO of Rs1.4 bn. With weighted average equity IRR (WIRR) of 16% & balance life of 22 years, With CoE at ~14%, ABL today boasts of one of the most lucrative BOT portfolios yielding 1.14X investors return expectation thereby creating sustainable shareholder value.”ABL, with over 15 years of experience has executed 59 road projects or 3,095 lkm. ABL’s unmatched developer track record, ideally complemented by its strong E&C capabilities has driven its transition from a small state level developer to a full scale national highway player. India’s massive road development program presented a solid growth opportunity for premier state road developers like ABL. The opportunity was lapped up by ABL's aggressive management & we saw ABL bagging 3 big NHAI projects (Belgaum-Dharwad, Sambhalpur–Baragarh& Dhankuni– Kharagpur) worth Rs40 bn over last 18 months. With more than 95% land acquisition complete for its Belgaum & Dhankuni project & with financial closure of just one project pending, we believe that ABL has crossed major execution hurdles. Though equity funding is not fully tied up (equity requirement at Rs 12.9bn, shortfall of Rs4.7 bn), we do not see it as a major challenge for ABL. Management is actively considering multiple avenues like private equity funding (raising USD100-150mn by diluting stake at SPVs) and re-leveraging operational SPV’s (could provide addition debt of Rs 2.25bn). With necessary clearances & debt funding already in place, we believe ABL is on the verge of a strong growth trajectory.”ABL has an order backlog of Rs 41.5bn or 4.1x FY11 revenues offering significant visibility. Moreover, 40% of the portfolio set to commence toll collection in FY12E is likely to drive operational profitability. EPS is set to grow at a CAGR of 23% over FY11-13E.Our SoTP value for ABL comes to Rs 337 per share with 53% value from BOT portfolio and 47% value from E&C business at Rs158/share (8X its FY13E E&C earnings), offering a 40% upside from the current market price.
Source:Emkay
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