Broker’s call: PNC Infratech (Hold)

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Target: ₹339

CMP: ₹301.10

PNC Infratech (PNCL) Q2-FY25 operational results were lower than consensus estimates. Numbers were impacted from weak execution as adjusted revenue declined by 58 per cent y-o-y. The decline in revenue was due to delay in appointed date in certain projects and due to peak monsoon in some areas.

The company has lowered their revenue guidance to -15 per cent to -20 per cent (earlier -10 per cent) for FY25 as company is now disqualified for 1 year from bidding in MORTH and NHAI tenders. PNCL guides EBITDA margins around 12-12.5 per cent.

It has started the year with strong set of order inflow and is L1 for orders of ₹6,600 crore. Order book at ₹19,900 crore equals to 2.8x TTM Revenue with 70 per cent from road sector and remaining is from irrigation and water.

We retain Hold rating on the stock with & lowered our target price to ₹339, TP implies valuation of 10x FY26E EPS.

Stock catalyst is order win, from different state authorities and segments apart from NHAI/MORTH. Company has bidded in eight tender of Railways, area development projects & airport development projects.