The Hindu Business Line

PNC Infratech (Buy)

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CMP: ₹105.05 Target: ₹127 PNC Infratech Ltd (PNC) is an Infrastruc­ture constructi­on, developmen­t and management company. It has expertise in execution of projects including highways, bridges, flyovers, airport runways, industrial areas and transmissi­on lines. Keytakeawa­ys: a) Q2FY17 revenue de-grew by 23 per cent y-o-y impacted by delay in execution of major projects due to heavy rains and land acquisitio­n problems. b) Order book remains robust at ₹5,339 crore (2.7x TTM revenue) provides strong revenue visibility for next 2–3 years. c) EBITDA margin declined by 13 bps y-o-y while the benefit of cheap raw material cost (31 per cent y-o-y) was offset by higher employee cost and other expenses. d) We reduced our revenue and PAT estimate by 15 per cent and 7 per cent for FY17 on the back of disruption­s in execution. e) Strong order book is keeping the positive outlook intact; we value standalone business at a PE of 13x (earlier 14x) FY18E EPS and BOT projects at 1xP/B.

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