Emkay Global Financial Services has maintained 'Buy' on Ashoka Buildcon with target price of Rs 159 as against current market price (CMP) of Rs 130 in its report.
Commenting on the investment rationale, Emkay said, ''Order intake in FY15E largely led by T&D segment (Won orders worth Rs 8.7 billion) Given the tendering activity picked in the 2HFY15E in the road sector we expect order intake to be driven by road segment over the next 2 years
We build in order intake of Rs 20 billion in FY16E/17E against the management guidance of Rs 45-50 billion (Management expects order intake of Rs 10-15 billion in EPC cash contracts, Rs 30 billion in BOT PPP projects and Rs 5 billion in T&D segment by June 2015)
Biggest beneficiary of road projects to be tendered out in IHCY15E, scalability potential/capacity to bid enhances as secure funding for current and future growth, Value addition to be driven newer project wins and increase stake in the profitable projects
Expect 16% earnings CAGR in cash profits over FY14-17E The stock trades at FY16E/17E P/B of 1.5x/1.4x and EV/EBITDA 9.4x/8x Maintain Buy with target price of Rs 160 a share.''
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