Source - CNBC-TV18
Ashoka Buildcon has recently bagged a highway project from NHAI worth around INR 1,100 crore.
Mr Paresh Mehta CFO of Ashoka Buildcon said that company might grow by at least 15%. The company would have an approximate turnover of around INR 1,550 to INR 1,600 crore topline on the consolidated level and approximately over INR 100 crore on the profit after tax level.
Here is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying video.
Q - What is your total order book now? What kind of margins can this new order fetch?
A - We are focused road developer. We have 18 ongoing BOT operational projects and six projects under construction. We have an order book of INR 5,000 crore till date including this new order.
This order is a INR 1,100 crore highway project on National Highway 42 between Cuttack and Angul. It is a 112 km long project with two-four lanes. We have our internal benchmarks for bidding the projects and this project has been typically build at equity internal rate of return of 17-18%.
Cuttack-Angul is very attractive project. The growth potential is very high there. It caters to steel, power and cement industries. We also have big players like GMR and Lanco in power sector, and Jindal and Bhushan Steel in the steel sector. It will cater to a lot of movement of iron ore, coal, other inputs and final output in the sector.
Q - Your stock seemed to have reacted adversely over the last seven or eight days. Before the announcement of order, the stock lost almost INR 40, which is 20% in your stock price. The market seems to be concern perhaps with the aggression on that. How much different were the L2 and L3 bidders? Did you have to bid aggressively to win the order?
A -The market is a function of more of a demand supply of share rather than the performance or growth of the company. As far as the company goes, we continue to bid at hurdle rates of 17-18% on equity IRR, which we have been doing previously.
From the L2 and L3 bidders’ perspective, we quoted INR 61 crore at premium payable to the NHAI, whereas HCC was L2 that quoted INR 51 crore and one of the biggest players L&T also quoted INR 51 crore.
Definitely, the aggression is not there. Even our numbers do not indicate lower equity IRR. In the market, it is some kind of hedge fund who wants to exit before the year-end. For two days, we have seen the stock going down, but otherwise, we don’t feel so much of a concern. It will come back to normal.
(Sourced from CNBC-TV18)
