PNC Infratech: ‘Buy’ rating with target price of Rs 197

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Published: December 27, 2018 2:25:31 AM

PNC has submitted duly executed financing documents to NHAI for the three HAM projects (in Chakeri Allahabad, Aligarh Kanpur and Challakere Hariyur) and expects to receive appointed date in the current financial year (FY19).

highway, highway project, road projectPNC has total 7 HAM projects of project cost Rs 88.97 bn.

PNC Infratech (PNC) is well placed in the road EPC business amongst most of its peers based on strong order book, execution timeline, healthy balance sheet and financial closure achieved in its HAM projects. PNC has submitted duly executed financing documents to NHAI for the three HAM projects (in Chakeri Allahabad, Aligarh Kanpur and Challakere Hariyur) and expects to receive appointed date in the current financial year (FY19).

PNC does not see any major problem in meeting equity commitment in HAM projects as it expects strong cash generation, has low net debt at standalone level and is monetising its BOT assets.PNC has robust order book of Rs 149 bn (including HAM projects & new EPC projects of Rs 87.5 bn) which is over 8x its FY18 revenue and gives strong revenue growth visibility for the next thr-ee-four years. Further, the firm is targe-ting to add another Rs 30-40 bn of new orders in H2Y19 from new expressways.

PNC has guided for over 50% yoy growth in FY19E and 35% yoy growth in FY20E revenue with EBITDA margins of 13.5-14% based on strong order book and execution timeline. We have maintained our FY19E and FY20E earnings estimates based on strong H1FY19 and positive outlook for H2FY19. The EPC business (adjusted for Rs 30 per share value of BOT) is available at a PE of 12x and 9.9x based on FY19E and FY20E EPS of Rs 9.2 and Rs 11.1 per share, respectively. We maintain our Buy rating on the stock with unchanged SOTP based target price of Rs 197.

PNC has total 7 HAM projects of project cost Rs 88.97 bn. Of seven HAM projects, four are at construction stage and in balance three projects, it has submitted financing document to NHAI for financial closure and is awaiting app-ointed date. The firm has submitted duly executed financing documents to NHAI for Chakeri Allahabad, Aligarh Kanpur and Challakere Hariyur HAM projects.

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