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Anand Rathi
PNC Infratech (Buy)
CMP: ₹166
Target: ₹213
Having started FY19 on a strong note, PNC Infratech’s industry-leading growth seems certain because of steady acceleration in its pace of execution, comfortable debt position and huge order backlog. Cash-flow generation is expected to be good enough to take care of equity requirement, whereas the under-levered balance sheet would mean equipment financing is resorted to for capex needs. Its strong growth, proven execution capabilities, a well-placed balance sheet and reasonable valuations are reasons enough to support our ‘buy’ call.
Valuation: As we revise our estimates to factor in stronger-than-expected inflows, raise capex and tweak debt, our FY19e earnings are up about 5 per cent, and largely unchanged for FY20.
Risk: Slower-than-expected pace of execution.
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