Dolat Capital is bullish on PNC Infratech has recommended buy rating on the stock with a target price of Rs 233 in its research report dated June 26, 2020.
Dolat Capital's research report on PNC Infratech
PNC reported revenue in line, EBITDA margin lower and APAT above estimates. PNC posted 7.6%/ 3.4%/ 2.6% YoY growth in revenue/ EBITDA/ Adj. PAT to Rs11.6 bn/ Rs1.6 bn/ Rs761 mn in Q4FY20. The company is facing labour shortage and is currently operating with 75% strength and expects 100% post monsoon. We broadly maintain our revenue and EBITDA margin estimates for FY21E/ FY22E. However, we increase our FY22E APAT estimates due to lower tax as company will adopt the new tax rate from FY22E. We expect healthy revenue/ APAT CAGR of 9.1%/ 8.1% over FY20-22E. Moreover, revenue/ APAT growth significantly slows down to 2.3%/ -10.3% in FY21E due to lockdown impact and jumps back to revenue/ APAT growth of 16.4%/ 30.2% in FY22E driven by stabilization of labour and supply chain issues coupled with execution from 4 HAM projects where AD is expected in Q3FY21E.
The current core construction valuations of 11.3x/ 8.7x FY21E/ FY22E EPS are attractive. Thus, we maintain Buy, with SOTP of Rs233 (10x FY22E EPS and 1x FY22E P/B for HAM and BOT investments).
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