Buy This Infra Stock For Strong Potential gains Of 24%, Consolidated Revenues Up 29.26% QoQ

Hem Securities, a well-known brokerage firm operating in India has recently published a report on PNC Infratech Ltd, where the brokerage recommends investors buy the stocks of the company for a target price of Rs 294 per share. The company has given Rs 2,226 Crore consolidated revenues in Q4 FY22.

Stock Overview: CMP, Target Price, Returns, Potential Gains, 52-Week Low & High

The Current Market Price (CMP) of the PNC Infratech Ltd is Rs 238.20 per share. The stock has touched the 52-week high of Rs 226.60 per share level on 11 May 2022 and hit the 52-week low of Rs 395.90 per share level on 13 October 2021 on NSE. The stock is trading near its 52-week low on NSE.

The stock likely to gain nearly 24%, considering the estimated target price and the current market price of the stock.

The stock in terms of return on investment doesn't look good in short-term investment as it gave negative returns over the last 1 year of almost 7.51%. However, it has given positive returns on long-term investment, particularly in 3 years and 5 years. It gave 14.59% in 3 years, and 61.63% in 5 years, respectively.

Returns Overview & Segmental Analysis

PNC Infratech Ltd Q4 FY22 consolidated revenues came in at Rs 2,226 Crore, up by 19.40% YoY and 29.26% QoQ. Op Profit for Q4FY22 stood at Rs 480 Crore, up by 14.28% YoY and 47.69% QoQ. Op margins for Q4FY22 came at 22%, -100bps YoY and +300bps QoQ. PAT for Q4FY22 stood at Rs 247 Crore, up by 64.66% YoY and 197.5% QoQ.

Q4FY22 Revenue Breakup: Contract revenue comprises 81% and Toll/Annuity constitutes 19% of the overall revenue.

Management Commentary

Management has given a revenue guidance of 15% for FY23. They are confident of maintaining EBITDA margins in the range of 13%- 13.5% on a standalone basis for FY23. Management has given order book guidance of 8000-10,000 crore for FY23. Order inflow in FY22 stands at Rs. 11,152 crore and unexecuted order book as on 31st March 2022 stands at Rs. 14,663 crores. Out of the total order-book, the Roads & Highway Projects contribute around 65% and Water & Irrigation projects contribute around 35%.

Why it is a good buy?

In March-22 company received bonus of Rs. 82.68 crore for Purvanchal Expressway, Package -5 for 132 days early completion. In April-22 company received Rs. 37.02 crore bonus for Purvanchal Expressway Package - 6 towards 97 days early completion. The company aims to invest Rs.100-120 crore as capex in FY23 and working capital days are expected to remain around 95 days. The company has been declared L-1 bidder in 7 new HAM projects awarded by NHAI with a BPC of Rs. 8,446 crore.

Other Business Updates

The company has a total of 18 HAM projects and total equity requirement is approximately Rs. 2,390 crore, out of which they have already invested 915 crores till March 2022. Present capex will enable the company to register a topline of around Rs. 8000-10,000 crore.

 

Brokerage Comments & Views, Suggests Buy For a Target Price Of Rs 294

"We believe the company will continue to post good results in the coming few quarters on the back of robust tendering activity. The company's unexecuted order book provides revenue visibility for the next 2-3 years. They have significantly reduced their debt on standalone basis. Moreover, the company has a good track record of finishing projects before the expected completion date. Construction space is witnessing robust growth as NHAI plans to lay down 25,000Km of national highway in FY23 taking the pace to 50km per day. We give a "BUY" rating on the stock and value the stock at 10x of FY24E earnings to arrive at a target price of Rs. 294," the brokerage has said.

Company Overview - PNC Infratech Ltd

PNC Infratech Ltd is one of the front-ending Indian infrastructure construction, development and management companies in the country, with wide experience and proven expertise in the execution of major infrastructure projects, including highways, bridges, flyovers, power transmission lines, airport runways, industrial area development and other infrastructure activities with an established track record of successful execution of projects across sectors and geographies.

The company provide end-to-end infrastructure implementation solutions that include engineering, procurement and construction ("EPC") services on a fixed-sum turnkey basis as well as on an item rate basis. The company also execute and implement projects on a "Design-Build- Finance-Operate-Transfer" ("DBFOT"), Operate-Maintain-Transfer ("OMT") and other PPP formats.

Disclaimer

The stock has been picked from the brokerage report of Hem Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.