Prabhudas Lilladher is bullish on PNC Infratech has recommended buy rating on the stock with a target price of Rs 205 in its research report dated June 27, 2020.
Prabhudas Lilladher's research report on PNC Infratech
PNCL posted a strong operating performance in 4QFY20 with revenues up 7.6% and EBITDA margins stable at 13.5%, despite more than 10 days of revenue loss due to nationwide lockdown. Post relaxation in lockdown towards April’20 end, construction activity resumed across its project portfolio at ~75% efficiency levels with 70-80% (largest among its peers) labour availability. Toll collection have also recovered to 80-90% pre-covid levels led by pick up in commercial traffic, witnessed across its BOT portfolio. Management expects labour uncertainties to persist until monsoon and expects the execution to pick up pace from 2HFY21. PNCL remains as one of our preferred pick in the road infra space given its 1) healthy order book (Rs86.3bn as at 4QFY20), 2) stellar execution pace with most projects getting completed within stipulated time (fetching early completion bonus of Rs1,095mn in FY20), 3) stable EBITDA margins (14-15%) 4) comfortable debt-equity ratio of 0.2x.
At CMP, the stock trades at a P/E of 12x/7.3x on FY21E/FY22E EPS and is trading at an EV of 5.9x/4x FY21E/FY22E EBITDA. We maintain BUY rating on the stock with a TP of Rs205.
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