Buy PNC Infratech; target of Rs 290: HDFC Securities

HDFC Securities' research report on PNC Infratech

PNC Infratech (PNC) delivered an in-line 2QFY21 financial performance. Management commentary was upbeat on (1) FY21E order inflows pegged at Rs 100bn, (2) revenue guidance upped from 10% YoY de-growth to flattish trend, (3) NWC improvement for 2HFY21, (4) closure of BOT/HAM asset monetisation by Mar-21, and (5) growth backed by low peak debt levels of Rs 4.5bn. Valuations are supports at core EPC FY22/23E EPS of 5.4/4.7x.

Outlook

We maintain BUY on PNC, with an unchanged target price of Rs 290/sh, given a strong order book and net cash balance sheet. Key risks: (1) slowdown in NHAI ordering and (2) delay in the monetisation of HAM projects. Successful diversification, away from the roads sector, could lead to the expansion of multiple.

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