Stocks To Buy: This Small Cap Infra Stock Can Likely Deliver 36% Return In A Year

ICICI Direct has given a 'Buy' recommendation on the small cap company-PNC Infra for a target price of Rs. 350 to be realised in 12 months. Given the current price of Rs. 258, this translates to a likely return of 36%. Here are the finer details on the scrip including its company profile, results, valuation and the rationale for a buy as given by the brokerage.

About PNC Infra

PNC Infratech Limited is an infrastructure construction, development and management company. The company has gained a prominent position in roads construction, water infra as well as airport runway works. The company with its sophisticated tools is able to deliver projects on time and till now has accomplished 70 major infrastructure projects.

Additionally the brokerage highlights that the company " reported 30.3% revenue CAGR in FY17-22; operating margin was in the
range of 13-15%. Also, the return ratios are healthy with RoCE at around 20%.

Q1Fy23

The infra entity posted healthy results for the latest June ended quarter. Standalone revenue was up 40.5% YoY to Rs. 1,758.1 crore. Notably the revenue
comprised Rs.37 crore bonus received for early completion of the project. EBITDA came in at Rs. 257.8 crore, up 46.9% with better project mix and
receipt of early completion bonus. Resultantly, margin stood at 14.7% up 64 bps YoY. PAT at the firm also gained by 78.5% YoY to Rs. 166.5 crore.

Main drivers for future stock performance

PNC is likely to be one of the major beneficiaries of thriving roads and water supply segment Jal Jeevan Mission) Strong order book position, receipt of appointed date in most of its projects, and execution pick-up to translate into 13.4% topline CAGR over FY22-24E and stable margins.

Planned monetisation of HAM/annuity assets.

Disclaimer

The stock is recommended as a buy by the brokerage firm. Readers should not consider the story as an investment advice into the stock and carry out own due-diligence before betting on any market linked security.