Ashoka Buildcon Share Surges on Signing Deal with NHAI

Ashoka Buildcon Ltd, a construction and engineering company, recently announced that its wholly-owned subsidiary, Ashoka Bowaichandi Guskara Road Private Ltd, has signed a concession agreement with the National Highways Authority of India (NHAI). The project involves the development of a 4-lane economic corridor in West Bengal under the Hybrid Annuity Mode (HAM).

The contract, valued at ₹1,391 crore, covers the construction of the Bowaichandi to Guskara-Katwa Road Section, spanning from Km 89.814 to Km 133.000 on NH 116A. The project is expected to be completed within 910 days, including the monsoon period.

Share Price Performance

The announcement of the new project has positively impacted Ashoka Buildcon’ share price. As of 9:51 am on January 7, 2025, the share price was trading 2.75% higher.

Special Purpose Vehicle (SPV) for Project Execution

To facilitate the implementation of the highway project, Ashoka Buildcon has established a Special Purpose Vehicle (SPV) named Ashoka Bowaichandi Guskara Road Private Ltd. The SPV will oversee project execution, ensuring compliance with the terms of the concession agreement signed with NHAI.

The hybrid annuity model combines elements of both Engineering, Procurement, and Construction (EPC) and Build-Operate-Transfer (BOT) approaches, providing upfront financial assistance from the government and ensuring smoother project delivery.

Financial Performance in Q2 FY25

Ashoka Buildcon’s impressive financial results for the second quarter of FY25 have also caught market attention. The company reported a 334.27% year-on-year (YoY) surge in net profit, reaching ₹462.5 crore compared to ₹106.5 crore in the same quarter last year.

• Revenue Growth: Revenue from operations grew by 15.5%, amounting to ₹2,489 crore as against ₹2,154.3 crore in the previous fiscal’s corresponding period.
• EBITDA Performance: Earnings before interest, tax, depreciation, and amortisation (EBITDA) rose by 65.8%, standing at ₹905.3 crore compared to ₹546 crore in Q2 FY24. The EBITDA margin improved to 36.4%, up from 25.3%.

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