YES Securities' research report on PNC Infratech
PNC Infratech has reported better-than-expected performance during Q1 FY21 (considering covid-19 related impact). Its revenue declined 31.5% yoy (to Rs.9.1bn) on standalone basis, largely impacted by operational shutdown during initial 20 days of Arp’20. Also labor issues and disrupted supply-chain, and early onset of monsoon impacted execution pace. Operating margin remained heathy at 13.2%. However, PAT declined 40% yoy to Rs.601mn largely due to subdued revenue. Labor strength across project sites have currently improved to ~90% of the pre-covid levels. However, execution is getting impacted with heavy monsoon and currently running at ~60% efficiency levels. Normalization in operating activities is expected during H2 FY21. At the end of Jun’20, PNC’s order book stood at Rs.77.6bn (excluding 5 HAM and 2 EPC projects estimated to have EPC value of Rs.77.6 bn). Including these projects, the order book stands robust at ~Rs.155bn (3x FY20 revenues). With COVID impact and weak near-term outlook, we have reduced our topline estimates marginally for FY21.
However, the company is well placed to speed up execution as COVID related impact settles. Recent order inflows, continued focus on asset monetization and comfortable balance sheet position provide comfort. We maintain our BUY rating for revised target of Rs.212.
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