Reliance Infrastructure Ltd Vs Ashoka Buildcon – Best Infrastructure Stocks

Company Overview of Ashoka Buildcon Ltd

Ashoka Buildcon Limited, a company based in India, specializes in infrastructure development. The company is involved in the construction and upkeep of roads, offering support services for toll roads and other projects. 

Additionally, Ashoka Buildcon Limited is active in the construction of various structures including buildings, power facilities, railways and city gas distribution networks. The company’s primary focus is on engineering, procurement, construction, operations and maintenance of roads and highways. Its business segments include Construction and Contract Related Activities, BOT/Annuity Projects and Sale (including Real Estate).  

Company Overview of Reliance Infrastructure Ltd

Reliance Infrastructure Limited is involved in the engineering and construction industry, operating across three key segments: Power, Engineering and Construction (E&C) and Infrastructure. The Power segment focuses on the production, transmission and distribution of electricity. 

The E&C segment provides construction, installation, commissioning and contracting services. The Infrastructure segment manages projects related to toll roads, metro rail systems and airports. Additionally, the company undertakes projects in the defense and infrastructure sectors through special purpose vehicles, handling their implementation, operation and maintenance.

The Stock Performance of Ashoka Buildcon Limited

The table below displays the month-by-month stock performance of Ashoka Buildcon Ltd for the past year.

The Stock Performance of Reliance Infrastructure Limited

The table below displays the month-by-month stock performance of Reliance Infrastructure Ltd for the past year.

Fundamental Analysis of Ashoka Buildcon Ltd

Ashoka Buildcon Ltd is a prominent infrastructure development company based in India. Established in 1976, the company has built a strong reputation for its expertise in the construction and maintenance of various infrastructure projects, including highways, bridges and urban development.  

The stock is priced at ₹172.12 with a market capitalization of ₹4,964.03 crore. It has returned 17.89% over the past year, with a -32.24% return in the last 6 months. The 5-year CAGR is 22.42% and it is 85.34% away from its 52-week high. The 5-year average net profit margin is 5.82%.

• Close Price ( ₹ ): 172.12
• Market Cap ( Cr ): 4964.03 
• 1Y Return %: 17.89
• 6M Return %: -32.24
• 1M Return %: -24.91
• 5Y CAGR %: 22.42
• % Away From 52W High: 85.34
• 5Y Avg Net Profit Margin %: 5.82 

Fundamental Analysis of Reliance Infrastructure

Reliance Infrastructure Limited is a prominent player in India’s infrastructure sector, specializing in various segments such as power generation, construction and transportation. Established as part of the larger Reliance Group, the company has a diverse portfolio that includes developing roads, metro rail systems and airport infrastructure.  

The stock is priced at ₹218.44 with a market capitalization of ₹8,718.04 crore. It has returned 16.88% over the past year, with a 2.76% return in the last 6 months. The 5-year CAGR is 75.96% and it is 60.68% away from its 52-week high. The 5-year average net profit margin is -3.33%.

• Close Price ( ₹ ): 218.44
• Market Cap ( Cr ): 8718.04 
• 1Y Return %: 16.88
• 6M Return %: 2.76
• 1M Return %: -17.79
• 5Y CAGR %: 75.96
• % Away From 52W High: 60.68
• 5Y Avg Net Profit Margin %: -3.33 

Financial Comparison of Ashoka Buildcon and Reliance Infrastructure

The table below shows a financial comparison of Ashoka Buildcon Ltd and Reliance Infrastructure Ltd.

Points to be noted:

• (TTM) Trailing 12 Months – Trailing 12 months (TTM) is used to describe the past 12 consecutive months of a company’s performance data when reporting financial figures.
• EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization): Measures a company’s profitability before accounting for financial and non-cash expenses.
• PBIT (Profit Before Interest and Tax): Reflects operating profit by excluding interest and taxes from total revenue.
• PBT (Profit Before Tax): Indicates profit after deducting operating costs and interest but before taxes.
• Net Income: This represents the company’s total profit after all expenses, including taxes and interest, are deducted.
• EPS (Earnings Per Share): This shows the portion of a company’s profit allocated to each outstanding share of stock.
• DPS (Dividend Per Share): Reflects the total dividend paid out per share over a specific period.
• Payout Ratio: Measures the proportion of earnings distributed as dividends to shareholders.

Dividend of Ashoka Buildcon and Reliance Infrastructure

Ashoka Buildcon has offered consistent dividends, with payouts ranging from ₹0.7 to ₹0.8, while Reliance Infrastructure has provided higher dividends, ranging from ₹7.1 to ₹9.5, showcasing its stronger dividend offerings. Check the table for complete details.

Advantages and Disadvantages of Investing in Ashoka Buildcon Limited

Ashoka Buildcon Ltd

The primary advantage of Ashoka Buildcon Ltd. lies in its expertise in road construction, particularly in developing and managing highways and expressways. This focus allows the company to secure large government contracts, ensuring steady revenue and growth opportunities.

1. Strong Government Ties: Ashoka Buildcon has secured numerous government contracts, especially in the road and infrastructure sectors. These contracts provide long-term revenue stability and growth as government investments in infrastructure continue to increase, benefiting the company’s pipeline of projects.
   
2. Project Diversification: In addition to road construction, Ashoka Buildcon is involved in various infrastructure projects, including urban transport and water supply systems. This diversification reduces the company’s reliance on a single market segment, mitigating risks and broadening its growth opportunities.
   
3. Solid Financial Performance: The company has shown consistent revenue and profit growth, driven by its large-scale projects and effective project management. This solid financial performance ensures the company’s ability to reinvest in further projects and maintain stability during economic fluctuations.
   
4. Operational Efficiency: Ashoka Buildcon is known for its efficiency in executing projects on time and within budget. This operational effectiveness allows the company to maintain competitive pricing and secure new contracts, improving its position in the highly competitive infrastructure sector.
   
5. Commitment to Sustainability: The company places significant emphasis on sustainable construction practices, including eco-friendly materials and methods. This focus on sustainability enhances its reputation, attracting clients who prioritize environmentally responsible infrastructure projects, supporting its long-term growth in the infrastructure sector.

The main disadvantage of Ashoka Buildcon Ltd. lies in its heavy reliance on government contracts, which exposes the company to risks such as policy changes, delayed approvals and budget constraints that could impact project timelines and revenue stability.

1. Government Contract Dependency: Ashoka Buildcon’s revenue is largely driven by government contracts, making it vulnerable to changes in government spending or project delays. Any shifts in policies or budget cuts can directly affect its ability to secure new contracts or complete ongoing projects.
   
2. Project Execution Risks: Despite a strong track record, the company faces challenges related to project execution. Delays in obtaining approvals, adverse weather conditions, or unforeseen logistical issues can impact the timely completion of projects, leading to cost overruns and financial strain.
   
3. Intense Competition: The infrastructure sector is highly competitive, with several players competing for limited government contracts. Ashoka Buildcon must continually innovate and maintain cost-efficiency to secure new contracts and stay ahead of competitors in a price-sensitive market.
   
4. Fluctuating Raw Material Costs: The company is exposed to price volatility in raw materials such as cement and steel, which are crucial for construction projects. Significant fluctuations in material costs can lead to increased project costs and reduced profit margins.
   
5. Debt Levels: Ashoka Buildcon’s capital-intensive nature requires significant borrowing, which increases its debt levels. High debt can strain financial health, especially if projects face delays or cost overruns, making it more difficult for the company to invest in future projects.

Advantages and Disadvantages of Investing in Reliance Infrastructure

Reliance Infrastructure Ltd

The primary advantage of Reliance Infrastructure Ltd. lies in its diversified portfolio across key sectors like power, infrastructure and transportation. This diversification provides the company with steady revenue streams, while also minimizing risks tied to individual sectors.

1. Diverse Business Segments: Reliance Infrastructure operates in power generation, transmission, distribution and infrastructure development. This diversification reduces reliance on a single sector, helping the company maintain stability and capture growth opportunities in multiple markets, including transportation and urban infrastructure.
   
2. Strong Infrastructure Projects: The company has undertaken numerous large-scale infrastructure projects, including roads, bridges and metro systems. These projects offer long-term revenue potential and are often backed by government contracts, ensuring stable cash flow and growth opportunities.
   
3. Experienced Management Team: Reliance Infrastructure benefits from a highly experienced management team with deep knowledge in the energy and infrastructure sectors. Their expertise in managing large projects and navigating regulatory challenges plays a key role in the company’s success and growth.
   
4. Solid Financial Performance: The company has demonstrated consistent financial performance, with steady growth in revenues and profits. This solid financial foundation enables Reliance Infrastructure to invest in new projects, expand its portfolio and maintain a competitive advantage in the infrastructure sector.
   
5. Focus on Sustainability: Reliance Infrastructure is committed to sustainable practices, particularly in energy generation and infrastructure development. The company focuses on eco-friendly solutions, reducing environmental impact and aligning with global trends toward sustainability, which enhances its long-term prospects and appeal to socially-conscious investors.

The main disadvantage of Reliance Infrastructure Ltd. lies in its heavy dependence on large-scale infrastructure projects, particularly those reliant on government contracts. This exposes the company to risks from policy changes, regulatory issues and budget constraints that could delay or cancel projects.

1. Government Contract Dependency: Reliance Infrastructure relies significantly on government contracts for its infrastructure projects, making it vulnerable to delays in approvals, changes in government spending and budget cuts, which can impact project timelines and revenue generation.
   
2. High Debt Levels: The capital-intensive nature of infrastructure projects means that Reliance Infrastructure often takes on substantial debt. This increases financial risk, especially if projects face delays or cost overruns and can strain the company’s cash flow and profitability.
   
3. Execution Delays: Despite its expertise, Reliance Infrastructure faces challenges in timely project execution. Delays in obtaining permits, unforeseen logistical issues, or regulatory hurdles can result in cost overruns and reduced profitability, affecting its overall financial performance.
   
4. Competitive Market: The infrastructure sector is highly competitive, with numerous players bidding for similar government contracts. Reliance Infrastructure must manage costs effectively, innovate and maintain strong client relationships to secure projects and remain competitive in the crowded market.
   
5. Fluctuating Raw Material Costs: As an infrastructure company, Reliance Infrastructure is exposed to price volatility in raw materials like steel and cement. Significant increases in the cost of these materials can impact project budgets, reducing profit margins and affecting the company’s financial performance.

How to Invest in Reliance Infrastructure and Ashoka Buildcon Stocks?

If you’re interested in investing in Reliance Infrastructure and Ashoka Buildcon Stocks, you can do so effortlessly through Alice Blue, which offers zero brokerage on equity delivery trades, allowing you to purchase stocks without any additional charges.

Step 1: Open a Demat & Trading Account

• Visit the Alice Blue website.
• Click on “Open Demat Account” and complete the registration process.
• Upload your PAN, Aadhaar and bank details for verification.

Step 2: Fund Your Trading Account

• Log in to Alice Blue and navigate to the Funds section.
• Deposit money using UPI, Net Banking, or NEFT/RTGS for seamless transactions.

Step 3: Search & Analyze Reliance Infrastructure and Ashoka Buildcon Stocks

• Use the search bar to find Reliance Infrastructure and Ashoka Buildcon Stocks.
• Review the stock’s market price, charts and company insights before making a decision.

Step 4: Place Your Buy Order

• Click “Buy” and select either a Market Order (instant purchase) or a Limit Order (buy at a specified price).

Ashoka Buildcon vs. Reliance Infrastructure Limited- Conclusion

Ashoka Buildcon is known for its expertise in road construction and infrastructure projects, relying heavily on government contracts. The company’s diversified portfolio offers growth opportunities, though it faces risks related to policy changes and project delays, which could impact its revenue stability.

Reliance Infrastructure boasts a diversified portfolio across power, transportation and urban infrastructure projects. Despite strong government backing, its heavy reliance on large-scale projects and high debt levels exposes it to risks such as regulatory changes and execution delays that could affect profitability and growth.

Ashoka Buildcon vs. Reliance Infrastructure – FAQ

Disclaimer: The above article is written for educational purposes and the companies’ data mentioned in the article may change with respect to time. The securities quoted are exemplary and are not recommendatory.