Buy PNC Infratech Ltd for the Target Rs 234 by Prabhudas Liladhar Ltd
In-line operating performance
PNC Infratech delivered an in-line operating performance in Q2FY27, with revenue broadly in line with our and consensus estimates, while EBITDA remained flat YoY as higher operating costs weighed on profitability. PAT declined to INR 0.73bn (-12%YoY), missing our and consensus estimates, impacted by higher depreciation and finance costs. Management reiterated FY27/FY28 revenue guidance of INR 60bn/75bn and FY27 order inflow guidance of INR 120–150bn, with INR 42.6bn secured so far. The company has identified ~80 projects worth INR 1,800bn for bidding through January 2027, with 17 bids worth INR 166bn already submitted. The High Court’s interim relief on the debarment order restores PNC’s eligibility to bid for NHAI, MoRTH and NHIDCL projects. International expansion into Kazakhstan, Georgia, Uzbekistan and the UAE offers additional growth opportunities, while execution ramp-up and fresh order wins remain key to achieving guidance. We factor in FY27E/FY28E EPS growth of 15%/28% and reiterate our BUY rating with a SOTP-based target price of INR 234 (earlier INR271), underpinned by a net cash balance sheet and valuations at ~6x 1HFY29E EPS and ~0.5x 1HFY29E BV.
In line Operating performance:
PNC Infratech reported standalone revenue of INR 11.4bn (+17% YoY) in Q2FY27, broadly in line with our and consensus estimates. EBITDA remained flat YoY at INR 1.4bn, also in line with expectations, as elevated diesel and bitumen prices amid the West Asia conflict weighed on operating profitability. PAT declined 12% YoY to INR 0.73bn from INR 0.86bn, missing our and consensus estimates by 11% and 5%, respectively. The earnings decline reflects weaker profit conversion, with modest growth in other income unable to offset the impact of operating costs, depreciation and finance expenses.
Guidance intact with strong bidding pipeline and diversification opportunities:
Management reiterated FY27 revenue guidance of INR 60bn, FY28 revenue of INR 75bn and a 12% EBITDA margin on FY27 core revenue, excluding the INR 2.17bn arbitration claim. FY27 order inflow guidance remains INR 120–150bn, with INR 42.6bn secured so far. The company has identified ~80 projects worth INR 1,800bn for bidding through January 2027, spanning EPC, HAM and DBOT/TBCB opportunities, with 17 bids worth INR 166bn already submitted. Beyond roads, PNC is pursuing power transmission, railways and international EPC opportunities across Kazakhstan, Georgia, Uzbekistan and the UAE. Management expects the existing INR 180bn+ order book and conversion of the bidding pipeline to support growth, although achieving guidance hinges on stronger H2 execution and fresh order wins.
Debarment order relief: The High Court, on 12 October 2026, stayed the effect of NHAI’s debarment order against PNC Infratech and its subsidiary, Avadh Expressway, restoring their eligibility to participate in tenders floated by NHAI, MoRTH and NHIDCL. This removes a key near-term overhang on order inflows and enables the company to pursue its bidding pipeline without the earlier restriction. Management confirmed that bidding activities have resumed, while the next court hearing is scheduled for 26 November 2026, with the final outcome awaited. No penalty or toll-loss recovery was booked in Q2FY27, as the identified defects were rectified within the stipulated timeline; only minimal repair and rectification expenses were incurred.
Entering International Markets:
PNC has incorporated a subsidiary in Kazakhstan to tap the country’s planned USD 9.8bn road infrastructure programme spanning over 3,000 km over the next three years. The company submitted a road project bid in Georgia in September 2026 and is exploring opportunities in Uzbekistan and the UAE. PNC will focus on non-fund-based EPC and cash-based projects, preferably funded by the World Bank and ADB, to minimise capital requirements and payment risks. Local partnerships will support logistics, material procurement and execution, leveraging PNC over three decades of road construction experience. Management is targeting EBITDA margins of 12–12.5%, broadly in line with domestic operations, while acknowledging limited overseas execution experience and competition from international players. International orders are excluded from FY27 order-inflow guidance as the company evaluates these markets
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SEBI Registration number is INH000000933
