PINC POWERPICKS - Myiris.com
PINC POWERPICKS - Myiris.com
PINC POWERPICKS - Myiris.com
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<strong>PINC</strong> <strong>POWERPICKS</strong> RESEARCH<br />
RESEARCH<br />
ASHOKA BUILDCON: BUY, TP-Rs365 (36% upside)<br />
What’s the theme?<br />
Ashoka Buildcon (ABL) with an experience of decade in BOT road projects currently has 23 projects under its<br />
portfolio, with 16 projects operational. ABL is amongst the few BOT developers, who has seen a <strong>com</strong>plete life<br />
cycle of project and has handed over four BOT assets back to the govt. ABL also has a strong in-house EPC<br />
arm, which executes captive as well as third party contracts.<br />
What will move the stock?<br />
1) Post IPO, ABL is aiming for the next league with aggressive but calculated bidding strategy. In FY11<br />
ABL has won projects worth more than Rs30bn. We expect ABL to maintain its market share of 3.5%<br />
for FY12 & FY13 in NHAI bidding.<br />
2) No dilution likely in medium term; ABL would require equity of Rs8bn in next three years, which is likely<br />
to <strong>com</strong>e from internal accrual and securitization of existing projects.<br />
Valuation & Re<strong>com</strong>mendation<br />
We value BOT (DCF basis) at equity multiple of 1.6x and 1.1x FY12E and FY13E. Our SOTP based target<br />
price is Rs365, where BOT is valued at Rs220 and EPC division at Rs145 at 9x FY12E earning. We have<br />
a 'BUY' re<strong>com</strong>mendation on the stock.<br />
What will challenge our target price?<br />
1) Further increase in interest rate, would lower IRR; 2) Lower traffic growth; 3) Slowdown in execution of<br />
current orders; 4) Any change in government policy that may adversely affect tolling charges.<br />
(Rs mn) FY10 FY11 FY12E YoY % FY13E YoY %<br />
Net Sales 7,956 13,020 20,105 54.4 23,250 15.6<br />
EBITDA 2,143 2,496 3,755 50.4 4,651 23.9<br />
EBITDA Marg. (%) 26.9 19.2 18.2 (95)bps 19.5 7 bps<br />
Adj. Net Profits 804 1,008 1,139 12.9 1,353 18.8<br />
Dil. EPS (Rs) 17.6 19.2 21.6 12.9 25.7 18.8<br />
PER (x) 15.2 14.0 12.4 - 10.4 -<br />
ROE (%) 20.6 31.2 12.8 (1837)bps 14.1 129 bps<br />
ROCE (%) 12.5 17.1 12.2 (492)bps 9.9 (232)bps<br />
2<br />
Sector: Infrastructure<br />
CMP: Rs268; Mcap: Rs14bn<br />
Bloomberg: ASBL IN; Reuters: ABDL.BO<br />
Price performance<br />
350<br />
300<br />
250<br />
200<br />
Dec-10 Feb-11 Apr-11 Jun-11 Aug-11<br />
SOTP<br />
ASBL BSE (Rebased)<br />
Particulars Rs/Share Percentage<br />
BOT Operational (SPV) 90 24.6%<br />
BOT Operational (Standalone) 28 7.6%<br />
BOT Under construction 102 27.9%<br />
Construction business 145 39.7%<br />
Total 365<br />
Upside (%) 36<br />
vinod.nair@pinc.co.in +91-22-6618 6379<br />
subramaniam.yadav@pinc.co.in +91-22-6618 6371
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