Here's Why the Stock of Ashoka Buildcon was in Focus Today

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  • Jul 13, 2021 - Here's Why the Stock of Ashoka Buildcon was in Focus Today

Here's Why the Stock of Ashoka Buildcon was in Focus Today

Jul 13, 2021

Ashoka Buildcon rose 5% to Rs 117.2 after the construction firm received a letter of acceptance (LoA) from National Highways Authority of India (NHAI) for a project worth Rs 7.3 bn.

The stock of the roads and highways construction company was trading close to its 52-week high of Rs 118.7 touched on 17 February 2021.

The project entails, proposal for development of Memmadpur (Ambala) - Banur (IT city chowk) - Kharar (Chandigarh) corridor under Bharatmala Pariyojana - Package - II - 6 laning of IT city chowk to Kurali, Chandigarh Road (Design length: 31.23 km) in the state of Punjab on EPC mode.

The announcement was made after market hours yesterday, 12 July 2021.

Company's order book

As on 31 March 2021, total order book of the company stood at Rs 81.7 bn, excluding orders worth Rs 19.5 bn which includes LoA received for Maldives EPC (engineering, procurement, and construction) project, G-RIDE project, and L-1 for Punjab EPC road project.

Out of the total order book, contribution from roads HAM (hybrid annuity model) and roads EPC is Rs 34.7 bn and Rs 27.1 bn, respectively; power T&D and others is at Rs 13.8 bn, railways at Rs 5.4 bn, and city gas distribution (CGD) contributes the rest.

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Key financial highlights for the March 2021 quarter

Ashoka Buildcon reported 9.6% higher consolidated net revenues for the March 2021 quarter at Rs 17.4 bn.

For the fourth quarter of 2021, Ashoka Buildcon reported net profit of Rs 1.4 bn compared to a net profit of Rs 1.3 bn in the same quarter last year.

While top line sales and other income provided the big boost, this was largely offset by a 40% spike in raw material costs during the quarter.

The net profits for the full year was up 70.5% at Rs 2.7 bn.

During the quarter, Ashoka Buildcon acquired 49% stake in Ashoka Highways Bhandara for Rs 359.8 m, which has been proportionately included in the quarter.

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Equitymaster on capital goods stocks

Here's what Aditya Vora, Financial Writer at Equitymaster, wrote about the capital goods sector in one of the editions of Profit Hunter:

  • I'm a firm proponent of the economic revival theme in the stock market. I'm bullish on capital goods and infrastructure stocks.

    These sectors have emerged stronger from an elongated down cycle. There is also a strong momentum in economic indicators which is in favour of these stocks.

    Indicators like rising construction equipment sales, record highway construction run rate, capacity expansion by private players in the cement, metals, and consumer durables gives us confidence of a strong capex cycle ahead.

    There may be a near term speed bump to the economic recovery due to the rising covid cases and lockdowns. However, I believe we are at an inflection point with regards to the capex cycle.

    The cycle has turned up.

The recent Hidden Treasure recommendation is a fundamentally strong business in the capital goods space that is 'essential' to the infrastructure revival.

You can read the report here (requires subscription).

If you're not a subscriber to Hidden Treasure, here's where you can sign up.

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How the stock markets reacted to Ashoka Buildcon

Shares of Ashoka Buildcon opened the day at Rs 114.9 on the BSE and Rs 114.8 on the NSE.

Its share price closed at Rs 111.8 (up 0.1%) on the BSE and Rs 112 (up 0.2%) on the NSE.

At its current price, it's trading at a P/E of 12.4.

The share touched its 52-week high of Rs 118.7 and 52-week low of Rs 50 on 17 February 2021 and 3 August 2020, respectively.

Over the last 30 days, the Ashoka Buildcon share price is up 15.1%. Over the last one year, the company's share price is up 75.5%.

In the past three months, Ashoka Buildcon has outperformed the market by surging nearly 30% against 8.5% rise in the BSE Sensex.

About Ashoka Buildcon

Ashoka Buildcon was incorporated in the year 1993.

The company is engaged in the business of construction of infrastructure facilities on engineering procurement and construction basis (EPC) and built operate and transfer (BOT) basis and sale of ready mix concrete.

The company has promoted special purpose vehicles (SPVs) for some of its projects wherein 'Toll Collection Rights' are received in exchange of the construction cost.

For this, the SPVs significantly engage the services of the company for contract related activities due to inherent execution capabilities/expertise and experience of the company.

It is organized in four divisions, namely, the BOT division, the engineering procurement & construction (EPC) division, the RMC & bitumen division, and the toll collection contract division.

Their head office is in Nashik, Maharashtra.

For more details about the company, you can have a look at Ashoka Buildcon factsheet and quarterly results on our website.

You can also compare Ashoka Buildcon with its peers.

Ashoka Buildcon vs Larsen & Toubro

Ashoka Buildcon vs NCC

Ashoka Buildcon vs KEC International

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

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ASHOKA BUILDCON Announces Quarterly Results (1QFY22); Net Profit Up 284.3% (Quarterly Result Update)

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