Prabhudas Lilladher (PL) has maintained 'Buy' on Ashoka Buildcon (ASBL) with target price of Rs 171 with current market price (CMP) of Rs 129 in its report.

Commenting on the investment rationale, PL said, ''The company highlighted that there are tenders worth Rs 200 billion live and are likely to be awarded in next few months and projects worth Rs 200 billion are in RFQ stage and will come up for bidding in next 6‐8 months. 60% of Rs 200 billion tender pipeline are likely to be on EPC route.

ASBL expects the competition in EPC tenders to be high in initial rounds. They believe BOT projects are likely to be less competitive as bank funding for BOT projects have become more stringent ( a combination of banks becoming more stringent in due diligence on road projects and weak balance sheet of most infrastructure players rendering funding difficult).  It is targeting to bag Rs 40‐50 billion worth of projects in the next 12 months. The company has outstanding order book of Rs 36 billion (Rs 20 billion T&D and RS 16 billion Roads). 

We expect the EPC segment to deliver Sales and PAT CAGR of 17% and 9% respectively over FY14‐17E and expect toll collection to grow at a CAGR of 127% over FY14‐16E. We believe the limited equity commitment in the current portfolio, funding from SBI Macquarie and a well‐ funded balance sheet makes it one of the beneficiaries of the upcoming opportunities in the Road sector.''

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