2024’s Multibagger Stock: Delivers 122 per cent Returns, Unlocks Rs 2,324 Crore via Subsidiary Stake Sale
With 122 per cent returns this year, the company secures Rs 2,324 crore by divesting subsidiary stakes, setting the stage for future growth.
Ashoka Buildcon Limited and its material subsidiary, Ashoka Concessions Limited (ACL), have announced the sale of their stake in 11 subsidiaries (SPVs) to Epic Concesiones 2 Private Limited and Infrastructure Yield Trust. The transaction, valued at Rs 2,324 crore, includes the transfer of entire share capital and shareholder loans. This move is subject to approvals from lenders, the National Highways Authority of India (NHAI), and the Competition Commission of India (CCI).
Buyers and Considerations
The buyers, Epic Concesiones 2 Private Limited and Infrastructure Yield Trust, are managed by EAAA India Alternatives Limited. They are not related to Ashoka Buildcon’s promoter group. The transaction, which is not a related-party deal, aligns with Ashoka Buildcon’s strategy to streamline its operations.
Timeline for Completion
The sale is expected to be completed in phases. SPVs where construction is finished are anticipated to be sold by September 2025, while others will follow based on contractual terms and approvals. Adjustments for cash and debt will be finalized during the process.
Financial Impact
The divestment will generate Rs 2,324 crore, bolstering Ashoka Buildcon’s financial flexibility. This move also helps in reducing debt and allocating resources for future projects. It is a key step in the company’s strategy to monetize assets and focus on core operations.
Stock Performance
Ashoka Buildcon’s stock has been a stellar performer, delivering a return of 122 per cent on a year-to-date (YTD) basis. Over the last year, the stock has also delivered a strong return of 122 per cent, reflecting investor confidence in the company’s strategic moves and growth potential
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Company Performance Highlights
Ashoka Buildcon is a major player in highway construction and infrastructure development in India. With a strong presence in over 20 states, the company has completed 41 PPP projects. Its current order book is valued at Rs 15,424 crore, with road and railway projects comprising the majority share.
Future Outlook
The company is optimistic about its growth prospects, aiming to secure Rs 4,000-5,000 crore in new orders this year. It targets revenue growth of 10-15 per cent for FY26, driven by a robust bid pipeline of Rs 1 lakh crore from NHAI.
Challenges Ahead
While the company is on a growth path, challenges such as higher working capital requirements and pressure on margins persist. Management expects margins to improve only by FY26 as older low-margin projects are completed.
This strategic divestment and focus on key areas position Ashoka Buildcon for long-term growth and sustainability in the infrastructure sector.
Disclaimer: The article is for informational purposes only and not investment advice.