Ashoka Buildcon shares jump 7% on securing ₹2,791 crore order from NHAI

Shares of Ashoka Buildcon, a company involved in construction and infrastructure facilities on an EPC and BOT basis, rose by 7% to ₹245 per share in early morning trade on Tuesday, November 19. The stock rallied after the company announced that it secured orders worth ₹2,791 crore from the National Highways Authority of India (NHAI).

The company informed investors through an exchange filing on Monday that it had emerged as the lowest bidder for two EPC projects from the NHAI in West Bengal under the Hybrid Annuity Model (HAM).

According to the regulatory filing, the first project involves the development of a 4-lane Economic Corridor from Kharagpur to Chandrakona Ghatal Road Crossing (Km 0.000 to Km 41.000) along NH 116A in West Bengal under the Hybrid Annuity Mode. This project costs ₹1,400 crore excluding GST.

The second project, worth ₹1,391 crore, focuses on developing a 4-lane Economic Corridor from Bowaichandi to Guskara Katwa Road (km 89.814 to km 133.000) along NH 116A, also in West Bengal, under the Hybrid Annuity Mode.

Meanwhile, the company’s Q2FY25 results fell below Street estimates, impacted by lower execution due to the heavy monsoon. Its standalone revenue and EBITDA declined by 9% and 17% year-on-year (YoY) to ₹1,400 crore and ₹120 crore, respectively.

EBITDA margins contracted by 80 basis points YoY to 8.4%, while interest costs rose sharply by 34% YoY to ₹70.6 crore due to higher debt levels. Adjusted PAT stood at ₹48.8 crore.

The company has revised its revenue growth guidance for FY25E from 15-20% to flat YoY, citing weak execution in H1FY25. However, it has maintained its inflow guidance of ₹10,000–12,000 crore, supported by strong inflows of ₹7,100 crore year-to-date and a robust bid pipeline.

According to domestic brokerage firm JM Financial, the order backlog stands at ₹11,100 crore (1.4x TTM revenue) as of September 2024 and is expected to improve in Q3 FY25 with the receipt of LoA for orders worth ₹4,300 crore in October 2024.

“Company entered into SPA with Indian Highway Concessions to sell 5 BOT assets at an equity valuation of ₹2,540 crore (much better than the earlier valuation of ₹1,340 crore). ABL will receive net proceeds of ₹860, which will be used to pare debt. ABL also targets to monetize 11 HAMs in FY25E, while that for Chennai ORR and Jaora Nayagaon remains delayed,” said the brokerage.

The brokerage retained its 'buy' rating on the stock with a target price of ₹300 apiece.

Stock down 17% from recent peak

After a strong rally from May 2023 to July 2024, during which the stock gained 240%, it has come under selling pressure in the subsequent months, a trend that continues into the current month. Currently, it is trading 17% below its recent peak of ₹284.75. 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.