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PNC Infratech Ltd – Multibagger Potential ?

CMP (Rs) = 286 (As on 02/09/2022)

High/Low (Rs) (52 Week)  = 396/219

Market cap (Cr) =  6630

Avg. daily vol. (6m) Shrs. = 497330

No. of shares (Cr) = 25.6

PNC Infratech Limited was incorporated on 09/08/1999 as PNC Construction Company Private Limited. The Company was converted into a limited company in 2001 and was renamed PNC Infratech limited in 2007.

PNC Infratech Limited is one of the leading infrastructure development and construction companies in India. The company undertakes infrastructure projects, including highways, bridges, flyovers, power transmission lines and towers, airport runways, industrial area development, and other infrastructure activities. 

PNC Infratech Ltd (NSE :PNCIL) reported a good set of Q1FY23 numbers driven by its superior execution and a robust order book. The company reported revenue of Rs 1,758 Cr (up 41% YoY) including a bonus of Rs 37 Cr, EBIDTA of Rs 258 Cr (up 47% YoY).

PNCIL has an order book of Rs 20,446 Cr (as of 30 th Jun’22), indicating revenue visibility for the next 2-3 years. With a great bidding pipeline in EPC and HAM projects along with other water projects in various regions across India. 

The management expects the margins to be around 13%-13.5% in FY23. With easing in commodity prices, we expect margins to be in the range of 13.5%-14% in FY24. PNCIL continues its sharp focus on maintaining the majority of the order book from road projects (both EPC and HAM). 

However, it intends to continue diversifying into other segments to bolster revenue growth and de-risk its business model further. The company expects good growth from water projects under the government’s Jal Jivan Mission. JJM along with canal now contributes to 39% of the overall order book.

The company’s Q1FY23 execution has been robust and it has guided for 15% revenue growth with order inflow expected in the range of Rs 8,000-10,000 Cr. The Road sector is witnessing good development owing to increased government thrust on infrastructure investment.

Furthermore, tightening of norms in bidding road projects by the NHAI augurs well for an organized player like PNCIL. The unveiling of the Gati Shakti Master Plan will provide further momentum to the project execution and avoid unnecessary delays

Delay in getting AD for new HAM projects, Asset monetization and new order inflow remains key.

The company has guided for 15% revenue growth in FY23, out of which 80% contribution will be from road projects and the balance 20% from water projects. Currently, the company has 24 projects comprising EPC, HAM, and BOT.

It has received PCOD & COD in 5 HAM projects, 6 projects are under construction, 6 projects where concession agreements have been signed, and 1 project where the company is L1. The current executable order book is Rs 13,000 Cr.

The company expects AD for pending HAM projects to be received by Q3-Q4FY23. Land acquisition is at an advanced stage for pending HAM projects where AD is awaited. The company expects some early completion bonuses in the coming quarters.

Under JJM(Jal Jivan Mission), the total order book stands around Rs 7,000 Cr and these orders are to be executed by FY25. The execution of orders under JJM depends on the preparation and approval of DPR (Detailed Project Report) and post that project has to be completed in 18 months. 

In Q1FY23 the company booked revenue of Rs 250 Cr and work done worth Rs 150 Cr is expected to be booked in August 2022. Out of the total order book Rs 1,700 Cr is executable and the balance is to be approved in FY23 and FY24. In JJM, price escalation is available for 60% of the project cost and the balance 40% is a fixed-price contract.

The company’s working capital days stood at 68 days in Q1FY23, compared to 77 days in Q4FY22. Total debt on a standalone basis stands at Rs 300 Cr with no working capital loan.

The cash on the company’s balance sheet stands at Rs 463 Cr.

Mobilization advance stands at Rs 496 Cr and retention money is Rs 189 Cr. Debtors stand at Rs 1,163 Cr, inventory stands at Rs 626 Cr and creditors stand at Rs 460 Cr

We believe PNCIL is in the right position to capture great growth opportunities in the infra sector moving forward. In light of the company’s robust order book and better execution prowess, we expect PNCIL to give a good upside movement in the near future.

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