ASBL reported decent quarterly performance with execution ramping up (6% YoY growth) across its project sites led by rising in labor availability. Margins continue to remain strong primarily driven by the reversal of contingency provisions for projects nearing completion and cost control measures. 

Going ahead execution will garner pace with the pickup in construction activity for newly awarded and under-construction projects and labor availability reaching normalcy. Also, negotiations restarting with prospective buyers for the SBI Macquarie stake sale with some more clarity will eventually reduce the overhang on the stock. We remain positive on the company given a) its excellent blend of diversified EPC orders and Asset ownership (23 Road assets and 3 City Gas Distribution assets), b) stable EPC margins, and c) healthy order book (Rs93bn as at 2QFY21) and its foray into new verticals- Railways (8% of order book) and smart cities.

At CMP, the stock trades at an EV of 6.2x/ 5.3x FY21E/ FY22E EBITDA. We maintain BUY rating on the stock with a So TP based TP of Rs147.


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