Markets

Broker's call: PNC Infratech (Buy)

| Updated on November 26, 2019 Published on November 27, 2019

Geojit Financial

PNC Infratech (Buy)

CMP: ₹192.25

Target: ₹223

PNC Infratech Ltd (PNC) is an Infrastructure construction, development and management company; expertise in execution of projects including highways, bridges, flyovers, airport runways, industrial areas and transmission lines.

Strong execution of big ticket orders & booking of arbitration claim of ₹109 crore led to robust revenue growth of 111 per cent y-o-y in Q2FY20.

EBITDA margins improved by 844 bps y-o-y at 21.8 per cent while adj. for one-off EBITDA margin remain stable at 13.8 per cent.

In Q2FY20 PNC has bagged a fresh order of ₹1,062 crore and Order book stood healthy at ₹9,877 crore which is 2.3x TTM revenue, provides improved visibility.

PAT grew by 489 per cent y-o-y to ₹207 crore due to strong margin, lower tax rate of 16 per cent and higher other income.

We increase revenue estimate for FY20E/21E by 21 per cent/13 per cent respectively as new HAM projects starts contributing to revenue book.

We value standalone EPC business at a P/E of 11x on FY21E EPS and BOT/HAM projects at 1xP/B and reiterate ‘buy’ rating.

Published on November 27, 2019
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