Multibagger Smallcap Stock Book Profit at 25% absolute return since January 2022, buy: Sharekhan

Stock market outlook

The current market price (CMP) of ASL stock is Rs 217.70 each on BSE at the time of writing. On the BSE, the stock’s recorded 52-week low is Rs 102 each and the 52-week high is Rs 230.85, respectively.

Returns on investments over the past 5 years

Returns on investments over the past 5 years

During the week, the stock jumped 1.68%. The stock over the past 1 and 3 months has jumped nearly 22.89% and 59.55%, respectively. Over the past 1 year, the stock has fallen 94.16%. Over the past 3 years. Over the past 3 years, the stock has yielded a multibagger return of 626.5%. Hover over it has given a positive return of 18.1% over the past 5 years.

Increase sales bookings

Increase sales bookings

ASL is eyeing over 40% year-on-year growth for FY2023 to Rs. 1,100 crore. It lined up key projects for launches including Titwala (October launch, sales potential of Rs. 220 crore), Shilphata (Q4FY2023 launch, Rs. 400 crore) and sales opening in existing projects viz. . Amisha (Taloja), Anmol (Badlapur), Arshiya (Khopoli), Aloki (Karjat), Aspire (Panvel) and Aakarshan (Taloja). Longer term, it plans to increase its sales reservation volumes from 1.38 msf in fiscal year 2022 to 2-2.1/2.5/3 msf in fiscal year 2023/2024 /2025.

Faster execution and BD opportunities

Faster execution and BD opportunities

ASL has strengthened its execution capabilities with the onboarding of major contractors over a year to a year and a half for labor availability. A few contractors have undertaken sub-contracting work for larger players like Godrej Properties. It aims to increase its execution capabilities from 1 msf per year currently to 2 msf by FY2024. On business development (BD), he continues to prospect for proposals in the region between Panvel and Thane. He remains open to the JV/JDA model for projects with sales achievement above Rs. 6000psf while below that he would prefer an outright purchase.

Debt reduction

Debt reduction

The company expects secured funding to decrease each quarter. HDFC debt repayment (~Rs. 120 crore in Q1FY2023) has started and will be fully repaid by December 2023. Currently, it has only used construction finance for two projects. He has no plans to raise funds through QIP for now as he is using Rs. 45 crores (16.43% interest rate) from ICICI Ventures for business development. Furthermore, it plans to repay the developer’s loan (~Rs. 150 crore at an interest rate of 13% per annum) over 3-4 years as cash flow increases.

Book Profit at 25% absolute return since January 2022, buy for a target price of Rs 225

Book Profit at 25% absolute return since January 2022, buy for a target price of Rs 225

ASL has returned a handsome 25% since we launched viewpoint coverage on the stock as of January 5, 2022, thanks to strong sales bookings over the past two quarters and new business development. Its leading position in the Mumbai Metropolitan Region (MMR), particularly in the affordable housing segment, places it in an ideal location to benefit from strong tailwinds in this segment. It is expected to increase sales bookings and the pace of execution over the next two to three years. However, the stock is currently trading at a P/B of 2.9x on FY2024 earnings, which we believe takes into account the expected increase in trading, leaving limited upside potential. Therefore, we advise investors to book profits at this stage.

Main risks

Main risks

According to the brokerage, the main risks would be: “a strong recovery in sales bookings, the pace of execution and new business developments are the main risks to our appeal”.

Disclaimer

Disclaimer

The stock was selected in Sharekhan’s brokerage report. Greynium Information Technologies, the author and the respective brokerage are not responsible for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.

Comments are closed.