Buy PNC Infratech; Target Of Rs 210: ICICI Direct
ICICI Direct is bullish on PNC Infratech has recommended buy rating on the stock with a target price of Rs 210 in its research report dated November 03, 2020.
Nov 7, 2020 / 01:41 PM IST
ICICI Direct's research report on PNC Infratech
PNC Infratech (PNC) reported a better-than-expected performance in Q2FY21. Topline, adjusted for one-off Rs 109.5 crore as arbitration claim for Hapur-Moradabad project in the base quarter, de-grew merely by 1.6% YoY to Rs 1,053.5 crore. The performance was resilient, given the heavy monsoon period and disruptions caused by Covid-19 pandemic. Operating profit came in at Rs 142.1 crore, down ~44.8% YoY. Here also, adjusted for the one-off element in the base quarter, the operating profit decline was merely ~3.8% YoY. The consequent margin, was at 13.5% (down 30 bps YoY, on adjusted basis). Reported PAT of Rs 69.3 crore (down 66.5% YoY) was a beat led by superior operating performance. On adjusted basis, PAT was up ~12% YoY.
PNC remains our preferred pick in the EPC space given its robust order book, healthy return ratios and lean balance sheet. Notwithstanding its asset monetisation plan fructification, sufficient internal accruals from current order book is enough for equity infusion. We maintain our BUY rating with a revised SoTP target price of Rs 210/share. We value its construction business at Rs 169/share (at 5x FY22E EV/EBITDA implying ~10x FY22 EPS).
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