PNC reported strong Q2FY19 results and was ahead of our estimates led by strong execution, but EBITDA margin was below our estimates.
- PNC reported 108% yoy growth in standalone revenue driven by strong execution of its projects as it has received appointed date in most of the EPC projects and had moved well in terms of execution.
- EBITDA margin at 13.4% was lower than our estimates driven by increased employee expenses and other expenses due to mobilization of resources to the new projects site.
- PNC has robust order book of Rs 149 bn (including HAM projects & new EPC projects of Rs 87.5 bn) which is over 8x its FY18 revenue, gives strong revenue growth visibility for the next 3-4 years. Further, the company is targeting to add another Rs 30-40 bn of new orders in H2Y19 from new expressways.
- PNC has guided for over 50% yoy growth in FY19E and 35% yoy growth in FY20E revenue with EBITDA margins of 13.5-14% based on strong order book and execution timeline.
Valuation & outlook
- We have marginally revised our FY19E and FY20E estimates based on H1FY19 revenue and margins, revised capex guidance and increased debt. The EPC business (adjusted for Rs 30 per share value of BOT) is available at a PE of 13x and 10.7x based on FY19E and FY20E revised EPS of Rs 9.2 and Rs 11.1 per share, respectively.
- We maintain our Buy rating on the stock with revised SOTP based target price of Rs 197 (Vs Rs 219 earlier).
Shares of PNC Infratech Ltd was last trading in BSE at Rs.149 as compared to the previous close of Rs. 145.15. The total number of shares traded during the day was 5387 in over 135 trades.
The stock hit an intraday high of Rs. 153.9 and intraday low of 146. The net turnover during the day was Rs. 798593.