PNC Infra emerges as lowest bidder for NHAI project; brokerage sees up to 35% potential upside
Shares of PNC Infratech rallied as much as 5 per cent during the early trading session on Wednesday after the company emerged as the lowest bidder (L1) for the national highway project between Varanasi and Kolkata, connecting Ranchi.
PNC Infratech emerged as the L1 bidder in National Highways Authority of India’s (NHAI) highway project for construction of a six-lane greenfield project between Varanasi-Ranchi-Kolkata from Pachmon village to Anarbansalea village under Bharatmala Pariyojana in the state of Bihar, the company said.
This project is likely to be in ‘Hybrid Annuity Mode’ and the total cost of the project will be around Rs 1,260 crore, the company said in the exchange filing. “Project is to be constructed in 24 months and operated for 15 years, post-construction,” it added.
Following the announcement, shares of PNC Infratech jumped more than 5 per cent to Rs 299.90 on Wednesday, before trading at Rs 290.60 at 12.25 pm. Shares of the civil construction company settled at Rs 284.65 on Tuesday.
Listed in May 2015, shares of PNC Infratech have delivered a return of more than 270 per cent. The stock has gained about 20 per cent in the last one year, whereas the counter has dropped more than 12 per cent in the last one month.
PNC Infratech is an Indian infrastructure construction, development and management company, with expertise in the execution of major infrastructure projects, including highways, bridges, flyovers, power transmission lines, airport runways, development of industrial areas and other infrastructure activities.
Brokerage firms said the company’s recent order win has boosted its order book, increasing its revenue prospects for the upcoming financial years. The valuations of the company offer a better risk-reward ratio to the investors.
PNC) announced declaration of L1 bidder for two HAM projects of NHAI in Bihar aggregating Rs 2,004 crore. The order wins are critical due to nil order inflows during 9MFY2023 due to aggressive competitive bidding and weak sectoral tendering, said Sharekhan.
The order book as on Q3FY2023 stood healthy at Rs 17,842 crore (2.6x TTM standalone revenues), while receipt of new orders in the near term would aid healthy growth for FY2024 and FY2025, it said.
“We retain a ‘buy’ rating on the stock with an unchanged target price of Rs 390, considering a favourable risk-reward ratio and it being one of the key beneficiaries of a positive sector outlook,” it said. Sharekhan sees an up to 35 per cent upside potential in the stock.
PNC has made considerable investments in brand development and has emerged as a prominent contractor in the construction industry. It is actively working on 23 projects, including 6 BOT and 1 OMT project with both toll and annuity assets. It has 1 HAM project with 13 HAM projects under development, said Nirmal Bang Institutional Equities.
“The company expects total revenue of up to Rs 900 crore for FY23 from drinking water projects. Revenue from the Water and Irrigation segment (Jal Jeevan Mission is likely to start contributing significantly from 2HFY23, driving higher revenue growth in FY24,” it said with a target price of Rs 375 on the stock.
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