Buy PNC Infratech; target of Rs 300: ICICI Direct

ICICI Direct is bullish on PNC Infratech recommended buy rating on the stock with a target price of Rs 300 in its research report dated June 29, 2021.

Broker Research

June 29, 2021 / 03:19 PM IST

An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.

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ICICI Direct's research report on PNC Infratech

PNC Infratech’s (PNC) execution was robust, with a stronger than expected topline and higher margins led by operating leverage. Topline came in at Rs 1644 crore, up ~42% YoY, driven by improved executable order book and optimum labour availability. The consequent margin was at 14.1% (up 63 bps YoY), led by operating leverage. PAT came in at Rs 129.4 crore, up 70% YoY, led by a strong operating performance, lower interest costs and despite higher taxation.

Outlook

We maintain our BUY rating with an unchanged SoTP target price of Rs 300/share. We value its construction business at Rs 253/share (at 6.5x FY23E EV/EBITDA implying ~12x FY23 EPS).