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 258.05. 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 6500.70 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 30-06-2022, the company reported a Consolidated Total Income of Rs 2066.15 Crore, down -8.06 % from last quarter Total Income of Rs 2247.33 Crore and up 39.15 % from last year same quarter Total Income of Rs 1484.81 Crore. Company reported net profit after tax of Rs 240.66 Crore in latest quarter.

Investment Rationale
PNC Infratech (PNC) reported a robust beat of 23/22/32% on revenue/EBITDA/APAT, largely led by the roads segment. Water projects continue to see subdued execution, as only INR 27bn of the INR 80bn projects are under execution. As DPR gets approved, PNC expects another INR 15bn out of residual JJM orders of INR 53bn to move into execution by FY23 end. The overall revenue from the water segment is expected to be INR 13-14bn in FY23. PNC has maintained its revenue growth guidance of 15% YoY and EBITDA margin guidance of 13-13.5% for FY23. PNC expects an order inflow of INR 80-100bn in FY23. With cash balance of INR 4.6bn and standalone gross debt at INR 3bn, PNC had a net cash balance of INR 1.6bn, as of June’22. Capex guidance for FY23 stands at INR 1-1.2bn.

Promoter/FII Holdings
Promoters held 56.07 per cent stake in the company as of 30-Jun-2022, while FIIs owned 10.48 per cent, DIIs 28.57 per cent.