Dolat Capital is bullish on PNC Infratech has recommended buy rating on the stock with a target price of Rs 271 in its research report dated August 29, 2020.
Dolat Capital's research report on PNC Infratech
PNC reported results above estimates on all fronts. PNC posted 31.5%/ 33.3%/ 40.0% YoY de-growth in revenue/ EBITDA/ Adj. PAT to Rs9.1 bn/ Rs1.2 bn/ Rs601 mn in Q1FY21. The company is currently operating with 90% strength. We broadly maintain our estimates for FY21E/ FY22E factoring Q1FY21 results. We expect healthy revenue/ APAT CAGR of 9.1%/ 9.6% over FY20-22E. Moreover, revenue/ APAT growth significantly slows down to 0.1%/ -9.8% in FY21E due to lockdown impact and jumps back to revenue/ APAT growth of 19.0%/ 33.3% in FY22E driven by stabilization of labour and supply chain issues coupled with execution from 4 HAM/ 2 EPC projects where AD is expected in Jan’21/ Oct’20. Though the stock has increased ~20% since our Q4FY20 result update released on 27 Jun’20, the current core construction valuations of 10.8x/ 8.1x FY21E/ FY22E EPS are attractive.
Outlook
Thus, we maintain Buy, with SOTP of Rs271 (12x FY22E EPS and 1x FY22E P/B for HAM and BOT investments).
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