Multibagger infra stock give over 250% return in 8 years! Brokerage sees 34% upside in this midcap stock
1 min read . Updated: 13 Mar 2023, 06:36 PM IST
Premium- The brokerage has retained a 'Buy' rating on PNC with an unchanged target price of ₹390, considering favourable risk-reward ratio and it being one of the key beneficiaries of a positive sector outlook
The stock of PNC Infratech Ltd has delivered multibagger returns to investors as it has zoomed 257.60 per cent in the last eight years. Brokerage Sharekhan by BNP Paribas has retained a 'Buy' rating on PNC with an unchanged target price of ₹390, considering favourable risk-reward ratio and it being one of the key beneficiaries of a positive sector outlook.
“PNC has been affected by an extended monsoon during FY2023 leading to lowered guidance for FY2023. However, receipt of appointed dates for HAM projects and expected order wins in the near term would lead to higher revenue growth during FY2024 and FY2025," the brokerage said in a note.
Standalone OPM is expected to remain stable around 13.3-13.5 per cent during FY2023/FY2024. It would be required to bag ₹6000-8,000 crore order inflows in the near term to maintain growth rate post-FY2024 which the brokerage believes is achievable considering a strong project award pipeline for the industry.
“Further, fructification of asset monetisation would help free up equity and de-leverage PNC’s consolidated balance sheet," the note said.
Company outlook
The company eyes a 10-15% y-o-y standalone revenue growth and 13.5% OPM for FY23. It expects up to 10% y-o-y standalone revenue growth for FY2024 owing to delayed receipt of appointed dates for HAM projects. It targets ₹8000-10000 crore order inflows for FY23 and FY2024.
The company’s current order book stands at over ₹19,000 crore, which provides a healthy revenue visibility over the next two years. On the asset monetisation front, the management expects to sign definitive agreements for specific projects by FY2023 end.
Key risks
- Delay in the execution of projects affects net earnings.
- Weak macro environment leading to low visibility of project tendering affects business outlook.
- Increased interest rates, commodity prices, and tightening liquidity are inherent business risks.
On Monday, shares of PNC Infratech Ltd settled 1.67 per cent lower at ₹285.90 apiece on the NSE. If you look at the current share price, the stock is down 18 per cent from its 52-week high of ₹352, hit on October 2021. The midcap stock has recovered 29.91 per cent from its 52-week low of ₹219.