Buy PNC Infratech Ltd For Target Rs.392 - Yes Securities
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Disciplined contractor
Our view
PNC Infratech (PNCL) reported strong set of numbers with revenues coming in above our estimates, while EBITDAM coming below our estimate to 11.7%. Toll collection grew 84.9% YoY as 5 HAM projects has received COD and started receiving annuity. During Mar’22, the company has bagged 7 HAM projects (LOA already received) worth Rs84.5bn and expects to bag additional Rs80‐100bn of order inflows led by robust pipeline primarily in road segment. Given healthy order book (Rs146bn) and strong execution capabilities, management has guided for 15% revenue growth with EBITDA margins of 13‐13.5% range for FY23E.
PNCL continues to be one of our preferred picks in road infra space given its 1) healthy order book (~Rs146bn as on 4Q), 2) stellar execution pace and most projects getting completed within stipulated time, 3) stable EBITDA margins (13‐14%) and 4) low debt‐ equity. We expect PNCL to report Revenue/PAT CAGR of 14%/20% respectively over FY22‐FY24E. We maintain BUY rating on the stock with a SOTP‐based TP of Rs 392, which includes Rs378 for the standalone EPC business based on 15x FY24E EPS of Rs25.2 and the remaining for its BOT and HAM portfolios based on P/B.
Result Highlights
* For 4QFY22, PNCL’s revenues came in at Rs19.2bn, up 16.6% YoY (above our estimates of Rs15.4bn) with sharp pickup in execution levels.
* EBITDA grew by 48.7% YoY to Rs2.2bn (in line with our estimate of Rs2,2bn), with EBITDAM contracting 241bps YoY to 11.7% (below our estimates of Rs14.1%) On the bottom‐line front, adj PAT in 4QFY22 came in at Rs1,382mn, up 6.8% YoY (above our estimates of Rs1,265mn) mainly due to lower finance cost of Rs170mn (vs our estimate of Rs357mn)
* During 4QFY22, PNCL bagged major orders under road segment worth Rs84.5bn and water project worth Rs23.4bn also received Rs827mn towards bonus for early completion of Puruvanchal Expressway (Pkg V).
* At the CMP, the stock trades at a PE of 11.8x FY23E and 9.8x FY24E EPS
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