INSUBCONTINENT EXCLUSIVE:
Edelweiss Financial Services has a buy call on Ashoka Buildcon with a target price of Rs 201.
The current market price of Ashoka Buildcon is
Rs 131.90.
Time period given by the brokerage is one year when Ashoka Buildcon price can reach the defined target
Investment rationale by the brokerageMSII investment portends plethora of benefits: ASBL has announced that MSII has committed Rs 1.5bn of
equity investment in UEPL
UEPL recently commenced commercial operations of its first CGD project in the Ratnagiri district, Maharashtra
It also won two additional CGD licences, one for Latur and Osmanabad (Maharashtra), and one for Chitradurga and Davangere (Karnataka)
UEPL needs nearly Rs 1.6bn in equity for its existing projects
With a war chest of nearly Rs 3bn, the partnership will not only be sufficient to fund this equity commitment, but would also allow UEPL to
deviation from its core EPC/BOT operation
By bringing a reputed investor on board, the company has succeeded not only in abating concerns about equity infusion by ASBL in this
business, but has also taken the first step towards scaling up operations and, eventually, unlocking the value in the CGD business.
Outlook
and valuation: We believe the development will aid ASBL grow its CGD business while reducing its own equity commitment
A healthy order book, a lean balance sheet and robust traffic growth are the key positives
projects (DCF valuation).
