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The stock of Ashoka Buildcon rallied 10 per cent in the early part of last week, before cooling. A series of order wins has meant that its order book is healthy.
Ashoka’s order book is now healthy at over ₹5,900 crore, which is two times its FY17 revenues, thus giving it considerable visibility. The company expects to win another ₹4,000-5,000 crore worth of contracts, including a few in the power transmission and distribution segment over the next two to three quarters.
A re-rating is possible for the stock if the current momentum sustains.
Just last week, Ashoka and its subsidiaries emerged as the lowest bidders in two road contracts — one from the NHAI and another through Maharashtra PWD — for constructing highways in Gujarat and Maharashtra.
Further, it has managed to bag the Gujarat project (₹1,687 crore) under the hybrid annuity model (HAM). In the HAM model, revenue risks are reduced for the bidders and the government too does not have to spend too much upfront.
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