Ashoka Buildcon rallies 6% on strong order book; zooms 124% in CY24

As on September 30, 2024, the company's balance order book stood at Rs 11,104 crore, excluding additional orders post September 2024 worth of Rs 4,320 crore, and L1s of Rs 265 crore.

Shares of Ashoka Buildcon hit a new high of Rs 312, as they rallied 6 per cent on the BSE in Monday’s intra-day trade amid heavy volumes in an otherwise subdued market on a strong order book position. The stock of the civil construction company has surpassed its earlier high of Rs 310.40 touched on December 18, 2024. In comparison, the BSE Sensex was down 0.15 per cent at 78,581 at 10:19 AM.

 

Ashoka Buildcon share price has zoomed 124 per cent so far in calendar year 2024, as compared to the 9 per cent rise in the benchmark index. The outperformance of the stock came due to a favourable outlook for the diversified engineering, procurement and construction (EPC) company, owing to a large pipeline of projects in transmission and distribution, roads, railways and urban transportation.

 

 

As on September 30, 2024, the company’s balance order book stood at Rs 11,104 crore. This excludes additional orders received from projects post September 2024 worth of Rs 4,320 crore, and also excludes L1 of Rs 265 crore. The total order book stands at Rs 15,424 crore.

 

The company’s order book is geographically diversified, with its presence spread across 20 states and overseas markets. The orderbook is well diversified across segments, with roads forming 46 per cent, followed by power T&D at 41 per cent, railways at 7 per cent, and building EPC at 6 per cent.  India is experiencing a massive boost in road infrastructure investment, bringing a major shift in connectivity and economic growth. To support this rapid growth in the transport network, the National Highway Authority of India (NHAI), has launched ambitious road development projects. And these actions aim to cut travel times, improve freight movement, and build a strong road system for the future of India.

 

Road investments in India have gathered pace significantly in recent years. A key factor driving this growth is the strong increase in toll revenue, bolstered by technological advancements like FASTag, regular toll rate adjustments for inflation, and overall economic growth.

 

Meanwhile, the company has entered into a sales and purchase agreement (SPA) with Indian Highway Concessions (affiliate of CDPQ) to sell 5 BOT (build, operate, transfer) assets at an equity valuation of Rs 2,540 crore (much better than the earlier valuation of Rs 1,340). Ashoka Buildcon will receive net proceeds of Rs 860 crore after payment of Rs 1,530 crore to SBI Macquarie for the exit, and Rs 1,500 crore for the purchase of a stake in Jaora Nayagaon. The company also targets to monetise 11 HAM assets in FY25E while that for Chennai ORR and Jaora Nayagaon remains delayed. Proceeds from the above deals will help the company to pare debt, according to analysts at JM Financial Institutional Securities.

 

Ashoka Buildcon plans to monetise 11 HAM and seven BOT projects and it is in the advanced stage of signing SPA for its Hybrid Annuity Mode (HAM) and toll projects and monetisation is expected by end of FY25. Going forward, the completion of stake sale transactions by FY25 is crucial from a credit perspective, according to CARE Ratings.