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Anand Rathi
PNC Infratech (Buy)
Target: ₹389
CMP: ₹304.65
The continuing good pace of execution with no orders since Jan’21 mean PNC’s revenue assurance is now ordinary. Citing sound prospect pipeline, and as it expects competition to moderate (with the benefits of diluted PQs/other relaxations announced under the AtmaNirbhar Bharat Scheme set to lapse on 31st Dec’21), management is sanguine of adding orders in time to keep growth going beyond the foreseeable future.
The balance sheet is sturdy, and with Ghaziabad-Aligarh monetisation nearing fruition, it has potential to be sturdier. On the proven execution abilities, a well-set BS and the potential, we raise our rating to a Buy with a higher TP of ₹389 (on rolling forward to FY24).
Q2 was devoid of any orders, but the firm order book, on including UP drinking water-supply orders, rose nearly ₹1,100 crore q-o-q to about ₹13,200 crore. With no orders for over nine months now, and as the pace of execution has held well, revenue assurance is now ordinary (about 2.3x); the order book, thus, needs to be attended to at the earliest. Citing a healthy prospect pipeline, aiming to benefit from the general surge in awarding in H2 and expected moderation in competition, management looks to add orders of about Rs 8,000 crore in FY22.
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