Shares of Ashoka Buildcon gained 7% during early trading hours on Tuesday, November 19, reaching Rs 245 per share before settling at Rs 235.40, reflecting a 2.90% increase as of 11:10 am IST on NSE.
The rally follows the announcement of two significant order wins from the National Highways Authority of India (NHAI), boosting investor sentiment.
Major Order Wins
Ashoka Buildcon disclosed securing two major contracts under the Hybrid Annuity Model (HAM) for infrastructure projects in West Bengal. The orders, valued at Rs 2,791 crore, highlight the company’s expanding infrastructure portfolio.
The first contract, worth Rs 1,400 crore (excluding GST), involves constructing a four-lane economic corridor along NH 116A from Kharagpur to Chandrakona Ghatal Road Crossing.
The second project, valued at Rs 1,391 crore, includes building another four-lane corridor along NH 116A from Bowaichandi to Guskara Katwa Road.
Challenges
Despite positive order inflows, Ashoka Buildcon’s recent financial performance has raised concerns. During Q2FY25, the company reported a 9% year-on-year decline in standalone revenue, amounting to Rs 1,400 crore.
EBITDA fell by 17% YoY to Rs 120 crore, with the EBITDA margin contracting by 80 basis points to 8.4%.
Rising debt levels have exacerbated financial pressures, with interest costs increasing 34% YoY to Rs 70.6 crore. Adjusted profit after tax (PAT) stood at Rs 48.8 crore, reflecting a challenging financial environment influenced by lower project execution during the monsoon season.
Future Guidance
In light of recent challenges, Ashoka Buildcon revised its FY25 revenue growth guidance from 15-20% to flat YoY.
Management remains optimistic about achieving inflow guidance of Rs 10,000–12,000 crore, supported by strong order inflows of Rs 7,100 crore year-to-date and a robust bid pipeline.
The company is actively pursuing asset monetization strategies to improve financial stability. It recently signed a Share Purchase Agreement (SPA) with Indian Highway Concessions to sell five BOT assets at an equity valuation of Rs 2,540 crore, significantly higher than previous valuations.
Net proceeds of Rs 860 crore are earmarked for debt reduction. Additionally, Ashoka Buildcon plans to monetize 11 HAM projects in FY25.
Technical Indicators
As of 11:10 am IST, Ashoka Buildcon’s stock is trading at Rs 235.40. Key technical indicators provide insights into the stock’s short-term outlook:
- 50-day SMA: Rs 239.79 – Indicates near-term resistance.
- 20-day SMA: Rs 233.24 – Current price is above this level, signaling potential bullish sentiment.
- 10-day SMA: Rs 234.09 – Suggests sustained momentum above this threshold.
- 5-day SMA: Rs 230.37 – Intraday momentum remains positive as the stock trades higher.
- RSI: At 49.33 on the daily timeframe, the RSI indicates neutral market sentiment, leaving room for directional movement based on market dynamics.
Note – Technical analysis tools, such as SMA and RSI, are used to assess market trends and potential price movements. However, they do not guarantee future performance and should be interpreted in the context of broader market conditions and individual investment goals. Always consider multiple factors before making trading decisions.
Market Performance
Ashoka Buildcon experienced a robust rally from May 2023 to July 2024, with its stock surging 240%. However, recent months have seen increased selling pressure.
While the company’s latest order wins have revived positive sentiment, challenges in financial performance and asset monetization delays remain key risks for investors.
Disclaimer – MarketScope Daily provides this information for informational purposes only and does not constitute financial advice. Readers are encouraged to conduct their research or consult with financial advisors before making investment decisions. The analysis provided represents the views of the mentioned brokerage firms and not necessarily those of MarketScope Daily.
