Result Update: PNC Infratech Ltd - ACCUMULATE - TP Rs.154 - Kotak

PNC Infratech has reported weak Q1FY18 results in line with our estimates. The standalone net sales (EPC Business) for the quarter declined by 30.7% yoy to Rs 3.6 bn as new projects were at initial stage and yet to contribute meaningfully. This kind of performance is expected to continue in Q2FY18 with rainfall affecting work and execution timeline. Further, the company is yet to achieve appointed date in two of its delayed projects of value Rs 16.3 bn on account of land acquisition hurdle and expect the same by Q3FY18. The company has robust total order book of ~Rs 87 bn (including HAM projects) which is over ~5x its FY17 revenue and gives strong revenue growth visibility for the next three years. Based on approval and execution timeline, we expect Q2FY18 to remain subdued on a strong base of last year and expect sharp pickup in revenue from H2FY18 onwards. The management has maintained guidance for Rs 40-50 bn of new orders in FY18 and expect 30% yoy growth in revenue with ~13% EBITDA margins in the year. We maintain our earnings estimates and target price of Rs 154. We maintain ACCUMULATE rating on the stock.

Source : Equity Bulls

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