Stock To Buy: This Small Cap Infra Stock Can Give 39% Return, PAT Gains 59% YoY

Reputed firm ICICI Direct has suggested investors to buy the stocks of PNC Infratech for an estimated 39% return in near term. The company has guided for around 15% revenue growth for FY23 with an operating margin of 13.13-5%.

Stock Target Price, Current Market Price, Market-Cap

The Current Market Price (CMP) of PNC Infratech (PNCINF) is Rs. 248. ICICI Direct has estimated a Target Price for the stock at Rs. 345. Stock is anticipated to give a 39% return, in 1 year. This is a small-cap company with a market capitalization of Rs. 6,519 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 248
Target Price	Rs. 345
Potential 1 year return	39.00%
52 week high share price	Rs. 395.90
52 week low share price	Rs. 226.60

The company has reported mixed financial results. PNC Infratech's standalone revenue was up 16.6% YoY to Rs. 1,780.6 crore. Its revenue includes Rs. 82.7 crore bonus received for early completion of the project. It has reported EBITDA at Rs. 224.7 crore which was down 3.3% YoY with a margin of 11.7%, down 241 bps YoY. The company adjusted for one-off (bonus & impairment), core margins were at 13% PAT was at Rs. 138.2 crore, up 6.8% YoY. Considering one-time impairment cost, PAT improved 59% YoY to Rs. 206 crore.

Stock advantages: ICICI Direct

Mentioning the advantages, the firm said that PNC's share price has developed at 11% CAGR over the past 5 years, from around Rs. 145 in May 2017 to Rs. 248 levels in May 2022. Additionally, the company is likely to be one of the major beneficiaries of the thriving roads and water supply segment (Jal Jeevan Mission). ICICI added, "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. The company has also planned monetization of HAM/Annuity assets, and it has booked Rs. 90.3 crore towards impairment of Ghaziabad Aligarh Expressway Pvt Ltd (associate company)."

According to the report, the company has guided for inflows worth around Rs. 8,000-10,000 crore in FY23E, with a focus on the roads and water supply projects. On the execution front, the company has reported 28% revenue growth during FY22 backed by its comfortable order book position, pick-up in execution and receipt of appointed date in most of the projects.

About the company: PNC Infra

PNC Infratech 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 has established itself as a strong executor in roads, water infra, and airport runway segments. Additionally, superior execution capabilities via ownership of modern equipment and in-house teams enables PNC to deliver projects on-time. PNC has executed 70 major infrastructure projects till date. Reported 30.3% revenue CAGR during FY17-22. PNC has received Rs. 82.7 crore towards bonus for early completion of Purvanchal Expressway (Package V) project during Q4FY22 achieving PcoD 132 days ahead of the scheduled date.

Disclaimer

 

The above stock was picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.