This Infra Stock Could Gain As much As 42%, Feels Axis Securities
Shares To Buy
In its latest report of March, Axis Securities has featured the stock of PNC Infratech among its top picks. The firm believes that the valuations are attractive and its robust order book will help drive growth.
Robust & Diversified Order Book
According to Axis Securities, as of Dec’22-end, PNC Infratech’s order book stands robust at Rs.17,842 crores (3x of FY22 revenue) and comprises of road projects both EPC and HAM and also Water projects. “PNC Infratech’s order book is comprised of road projects commanding 65% share and the balance 35% is contributed by water projects The order book gives revenue visibility for the next 2-3 years. We expect the company to deliver healthy revenue growth of 18% CAGR over FY22-25E. The company expects order inflow of Rs 8,000-10,000 crores in FY23E and the same for FY24E,” Axis Securities has said in its report.
Outlook for the road sector
According to Axis Securities, the Road sector is witnessing good development owing to increased government thrust on infrastructure investment. “Furthermore, the tightening of norms in bidding on road projects by the NHAI augurs well for an organised player such as PNC Infratech’s . Considering strong and diversified order book position, healthy bidding pipeline, new order inflows, emerging opportunities in the construction space, the company’s efficient and timely execution and strong financial credence, we expect PNC Infratech to report Revenue/EBITDA/APAT CAGR of 18%/22%/29% respectively over FY22-FY25E,” the brokerage has said.
Valuations
The stock is currently trading at 11x and 10x FY24E/FY25E EPS which is attractive. We recommend a BUY rating on the company and value the stock at 11x FY25 EPS and HAM portfolio at 1x book value to arrive at a target price of Rs 390 per share, implying an upside potential of % from current market price.