Buy PNC Infratech, target price Rs 407: HDFC Securities

HDFC Securities has buy call on PNC Infratech with a target price of Rs 407. The current market price of PNC Infratech Ltd. is Rs 257.45. Time period given by analyst is one year when PNC Infratech Ltd. price can reach defined target.

PNC Infratech Ltd., incorporated in the year 1999, is a Mid Cap company (having a market cap of Rs 6445.55 Crore) operating in Infrastructure sector.

PNC Infratech Ltd. key Products/Revenue Segments include Contract Revenue, Material and Scrap for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 2247.33 Crore, up 29.20 % from last quarter Total Income of Rs 1739.40 Crore and up 19.04 % from last year same quarter Total Income of Rs 1887.83 Crore. Company reported net profit after tax of Rs 257.71 Crore in latest quarter.

Investment Rationale
PNC Infratech (PNC) reported an in-line performance, owing to revenue/EBITDA/APAT of INR 19.2/2.2/1.4bn beating our estimates by 15.5/-1.5/0%. PNC has guided for revenue growth of 15% (over FY22 revenue) and EBITDA margin of 13-13.5% for FY23. With the EPC value of seven HAM projects awarded in Q1FY23, the OB stands at INR 210bn. The equity requirement for these seven projects is INR 14.8bn. PNC expects an order inflow of INR 80-100bn in FY23. With cash balance of INR 4.1bn and standalone gross debt at INR 2.2bn, PNC had net cash balance of INR 1.9bn, as of Mar-22. Capex guidance for FY23 stands at INR 1-1.2bn. have cut EPS estimate to factor in the impact of commodities inflation on water projects. Given a strong OB and a comfortable balance sheet, the brokerage maintains BUY, with a reduced TP of INR 407 (15x Mar-24E, 1x P/BV for HAM equity investment).

Promoter/FII Holdings
Promoters held 56.07 per cent stake in the company as of 31-Mar-2022, while FIIs owned 9.99 per cent, DIIs 26.83 per cent.