Since the announcement of its December quarter results, Ashoka Buildcon's shares have faced downward pressure. However, analysts at HDFC Securities continue to hold a bullish stance on the stock's long-term potential, highlighting its positive performance against expectations and robust outlook for the future.

Analyst's Insights:

Parikshit D Kandpal from HDFC Securities maintained a "buy" rating on Ashoka Buildcon's stock, revising the price target to ₹254 from ₹239. This updated target suggests a substantial upside of approximately 58% from the stock's recent closing price of ₹160.35.

Thesis Overview:

Despite the company's EBITDA margin falling short of expectations due to weaker margins in legacy projects, Ashoka Buildcon's December quarter results exceeded HDFC Securities' revenue, EBITDA, and APAT estimates by significant margins of 20/6.1/3%, respectively.

Looking ahead, the company anticipates achieving EBITDA margins of 10% or more from Q1/Q2FY25, with further improvement expected to reach 11-11.5%.

Ashoka Buildcon's order book as of December 2023 stands at ₹13,170 crore, equivalent to approximately 2.1 times FY23 revenue. Notably, the order book is well-diversified across various sectors and regions, showcasing a healthy mix across roads, power T&D, railways, and buildings.

Additionally, the company maintains a comfortable balance sheet, with standalone gross/net debt as of December 2023 at ₹1,100/830 crore, respectively, compared to ₹1,120/890 crore as of September 2023.

Price Action:

Despite recent pressure, Ashoka Buildcon's share price showed resilience, gaining 2.12% in early trade on Tuesday to reach ₹163.75. This positive momentum reflects investor confidence in the company's long-term growth prospects despite short-term fluctuations.