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.