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Buy PNC Infratech; target of Rs 219: Prabhudas Lilladher

Prabhudas Lilladher is bullish on PNC Infratech has recommended buy rating on the stock with a target price of Rs 219 in its research report dated August 31, 2020.

August 31, 2020 / 12:47 PM IST
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Prabhudas Lilladher's research report on PNC Infratech

PNC Infratech (PNCL) posted strong performance beating our and street estimates on all fronts despite impact of Covid-19 pandemic. Execution came in ~Rs9.1bn (vs PLe Rs4.3bn) with operating margins strong at ~13.2%. Company is further ramping up execution across project sites with labour availability reaching ~90% pre-covid levels. However, 2Q could be impacted due to onset of healthy monsoon. Toll collection rebounded sharply with collection reaching ~90% pre-covid levels across portfolio. As labour availability is improving, execution also picking up in current order book along with receipt of AD in new HAM projects, strong execution momentum is expected from 2HFY21. PNCL remains as one of our preferred picks in road infra space given its 1) healthy order book (~Rs155bn including recently bagged projects), 2) stellar execution pace with most projects getting completed within stipulated time, 3) stable EBITDA margins (14-15%) and 4) comfortable debt-equity ratio of 0.13x.


Given execution surprise in 1Q, we have revised our FY21E/FY22E earnings estimates by 6.8%/7.3%. At CMP, the stock trades at a P/E of 13.7x/8.3x on FY21E/FY22E EPS and is trading at an EV of 7x/4.8x FY21E/FY22E EBITDA. We maintain BUY rating with revised TP of Rs219 (earlier TP of Rs205).

For all recommendations report, click here


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Broker Research
first published: Aug 31, 2020 12:47 pm
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