HDFC Securities is bullish on PNC Infratech has recommended buy rating on the stock with a target price of Rs 234 in its research report dated June 27, 2020.
HDFC Securities' research report on PNC Infratech
Whilst PNC reported 4QFY20 Rev/EBIDTA/APAT miss of 8.1/10.3/3.8% respectively, gains on Balance sheet was commendable. NWC reduced from 97days in FY19 to 60days during FY20 on back of robust collections. PNC reported net cash of Rs 4.1bn. Despite challenging FY20, PNC backed new orders worth Rs 52bn taking the order backlog to Rs 135bn (2.8x FY20 Rev). Labour activity/Execution levels have recovered to 70-80% across sites and toll collection has reached 90% of pre COVID levels.
PNC remains well placed to gain from UP State Infrastructure build out and strong banking lines and balance sheet augurs well for growth recovery over FY21-22E. We have increased our FY21/22E standalone EPS by 3.9/4.3% and maintain BUY on PNC with a TP of Rs 234/sh (12x FY22E EPS, Rs 59/share for BOT/HAMs).
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