Anand Rathi 's research report on PNC Infratech
A sharply shortened working-capital cycle makes an inspiring FY20 all the more appealing. More positive is that there was no single driver for this. The recent strong hybrid-annuity wins considerably boost revenue assurance, but also bring with them greater funding needs. The balance sheet is in shape to meet this, and operations have mostly good generation potential for it. Any success with renewed efforts to monetise Ghaziabad-Aligarh (on the earlier agreement having expired) would augur well. Ample revenue assurance and a well-placed balance sheet are but some of the factors supporting a Buy call.
Adjusting for the Covid-impact, FY21e earnings are ~27% lower (~9% for FY22 on the rub-off effect). Our sum-of-parts-based TP is revised from `277 to `202, derived using 9x FY22 construction EPS and investments at 0.8x of DCF or of invested value. At the CMP, the stock (excl. investments) trades at 6.2x FY22e EPS.
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