PNC Infratech announced its results on Tuesday and had reported a total revenue of ₹2,066.14 crore in the June 2022 quarter, a 40 per cent y-o-y growth. The company’s stock closed 2.3 per cent higher on Wednesday, following the good numbers posted.
The company’s revenue can be segmented as the EPC and Toll/Annuity. As of June 30, 2022, the EPC segment contributed 81 per cent ( 32 per cent higher than June 2021 quarter) while that of Toll/Annuity contributing 19 per cent. This was 89 per cent higher than the June 2021 quarter.
The company has executed nearly ₹905 crore worth EPC project in its top six road projects in this quarter accounting for nearly 55 per cent of the EPC revenue in the quarter. The company had collected toll worth ₹222 crore in June 2022 quarter, which is 16 per cent higher than the same period previous year and the balance ₹175.2 crore would be annuity.
Although the company was able to register good topline growth, the operating expenses grew proportionally with the revenue, leading to a flat EBITDA margin at 25.2 per cent. The material and contract expenditure grew 46 per cent on absolute terms year-on-year. The interest and tax expense grew 4 per cent and 14 per cent, respectively. Though margins were flat, a 43 per cent growth in EBITDA helped profit after tax of the company grow by 104 per cent to ₹ 240.66 crore in June 2022.
Outlook and valuation
As on June 30,2022 the company had an orderbook of ₹20,446 crore, which is three times FY22 revenue. Of this, there are seven new HAM projects worth ₹7,439 crore. In June 2021, the orderbook was worth ₹12,095 crore. In the current orderbook, 61 per cent pertains to Road EPC projects, while 39 per cent pertains to water and canal works. According to the company, out of the ₹20,000 crore orderbook, projects worth ₹13,000 crore are executable in this financial year while the rest in next financial year.
Budgetary allocations for the road sector have grown at 32 per cent CAGR from FY16 to FY23 and for FY23 it is around ₹1.87 lakh crore. The company requires ₹1,361 crore additional equity for its HAM projects in next 2-3 years for which the company plans to fund it through internal accruals. In the current quarter, the company infused ₹114 crore equity in its HAM projects. In the remaining part of the year, the company expects to bag further orders worth ₹8,000 -10,000 crore.
PNC Infratech is trading at a one year forward P/E of 12.2x while its peers like KNR construction is trading at 15.6x and IRB, at 19.7x. PNC with its robust orderbook and profitability, as well as its reasonable valuation, looks attractive at this juncture.