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Narnolia Financial
PNC Infratech (Hold)
CMP: ₹134
Target: ₹154
PNCINFRA reported 54 per cent y-o-y growth in revenue mainly driven by execution of HAM projects. However, bottom line was down by 50 per cent y-o-y on account of higher tax rate as the revenue from 80 IA benefited projects gets over. Appointment date of 3 HAM projects and 1 EPC project is delayed due to some projects specific-issue though the land on these projects is excess of 80 per cent and management expect appointment date by the year end. Current equity requirement is ₹600 crore over the next 2-3 years and company is investing heavily on equipment (₹250 crore in FY19 and ₹150 crore in FY20). Additionally company is also looking to diversify its business into airport development which will require additional capital. Though nothing has been finalised on capital structure, the move will likely to increase burden on capital requirement. Going ahead, revenue growth momentum will remain strong as all the projects are expected to start contributing in revenue from next year onward
We have reduced our revenue/PAT estimate of FY20E by 5/12 per cent considering delay in appointment date. We value the stock at ₹154 (EPC business at 13x FY20E EPS and ₹35 per share for BoT/HAM business) and change our rating to ‘hold’ from ‘buy’.
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