Result Update: PNC Infratech Ltd - BUY - TP Rs.219 - Kotak

PNC reported strong Q1FY19 results and was ahead of our estimates led by strong execution and early completion bonus received in the quarter.

Key Highlights

- PNC reported 106.2% yoy growth in standalone revenue driven by pickup in execution of its projects as it has received appointed date in most of the projects and moved well in terms of execution.

- EBITDA margin at 17.6% was driven by certain one-off which includes, early completion bonus of Rs 253 mn related to Raebareli Jaunpur project which was completed ahead of schedule. Adjusted for this, EBITDA margin was at 14.7% and was inline with our estimates.

- PNC has robust order book of Rs 157.5 bn (including HAM projects & new EPC projects of Rs 91.3 bn) which is ~8.5x its FY18 revenue, gives strong revenue growth visibility for the next 3 years. Further, the company is targeting to add another Rs 20-25 bn of new orders in 9MFY19 depending upon new bids from NHAI and state government.

- PNC has maintained its revenue growth guidance of over 40% CAGR in FY18-20E on conservative basis with EBITDA margins of 13.5-14% and may revenue the same in Q3FY19 considering strong order inflows.

Valuation & outlook

- We have marginally revised our FY19E & FY20E estimates factoring in strong order inflows, revised capex guidance and better execution in Q1FY19. The EPC business (adjusted for Rs 30 per share value of BOT) is available at a PE of 15x and 11.4x based on FY19E and FY20E EPS of Rs 9 and Rs 11.8 per share, respectively.

- We maintain our Buy rating on the stock with SOTP based target price of Rs 219 (Vs Rs 218 earlier).

Shares of PNC Infratech Ltd was last trading in BSE at Rs.164.7 as compared to the previous close of Rs. 165.45. The total number of shares traded during the day was 5285 in over 185 trades.

The stock hit an intraday high of Rs. 169 and intraday low of 160. The net turnover during the day was Rs. 874133.

Source : Equity Bulls

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