March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 1 of 13
Before reading this report, you must refer to the disclaimer on the last page.
PNC Infratech Limited Absolute : ADD
Relative : Benchmark
Update Note: Estimate (), Target (), Rating () Regular Coverage 6% in 13 Months
Ramp up in execution likely from FY19, upgrade to ADD on recent price correction Construction
© 2018 Equirus All rights reserved
Rating Information
Price (Rs) 155
Target Price (Rs) 164
Target Date 31st Mar'19
Target Set On 11th Mar'18
Implied yrs of growth (DCF) 10
Fair Value (DCF) 150
Fair Value (DDM) 75
Ind Benchmark BSE Midcap
Model Portfolio Position NA
Stock Information
Market Cap (Rs Mn) 39,802
Free Float (%) 43.93 %
52 Wk H/L (Rs) 228.4/99.9
Avg Daily Volume (1yr) 506,296
Avg Daily Value (Rs Mn) 80
Equity Cap (Rs Mn) 513
Face Value (Rs) 2
Bloomberg Code PNCL IN
Ownership Recent 3M 12M
Promoters 56.1 % 0.0 % 0.0 %
DII 21.5 % -0.8 % 3.2 %
FII 5.9 % 0.4 % -0.3 %
Public 16.6 % 0.3 % -2.8 %
Price % 1M 3M 12M
Absolute -10.1 % -15.1 % 54.1 %
Vs Industry -6.2 % -8.9 % 34.8 %
ASHOKA -7.7 % -9.1 % 24.6 %
KNRCON -4.7 % 5.5 % 63.5 %
Standalone Quarterly EPS forecast
Rs/Share 1Q 2Q 3Q 4Q
EPS (17A) 2.5 1.4 3.0 1.3
EPS (18E) 1.2 0.6 3.6 2.2
We recently met the PNC Infratech (PNC) management and also visited one of their
under-construction HA projects (Dausa Lalsot). Our thesis of FY18E execution being
hit by slow-moving projects has played out. Going ahead, most of the slow-moving
projects would have received Appointed Dates (AD) by Mar’18-end and the company
should deliver robust execution over the next two years. EBITDA margins are likely to
remain steady at ~14% in both FY19E and FY20E. We therefore revise our standalone
sales/EBITDA estimates by 0%/-1% and 6%/6% for FY18 and FY19 respectively, and
upgrade the stock to ADD (from REDUCE) after the recent correction in valuations
and given the relative rating to Benchmark. Our Mar’19 TP of Rs 164 (Rs 162 earlier)
is set at 15x Mar’19 TTM EPS and based on FCFE valuation of the BOT business.
Strong revenue ramp-up to come from FY19E as book/TTM bill remains at 7x:
PNCL’s existing order book of ~Rs 100bn comprises Rs 71.9bn of HAM orders. The
company has already received AD for Chitradurga Davanagere and Jhansi Khajuraho
package II in Dec’17 and Feb’18 respectively, and is in advanced stages of receiving
AD for the Bihar EPC projects and Jhansi Khajuraho package I by Mar’18 end.
Moreover, it expects work to begin in all HAM projects by Mar’18. Management is
confident of bagging additional Rs 50bn of new orders by Mar’18 and Rs 70bn-80bn in
FY19. With ADs coming for most projects, we expect PNCL to post FY19E/FY20E
revenue growth of 41%/29% with steady EPC EBITDA margins of 14%.
100% operational BOT portfolio, 5 HAM projects valued at 1.5x invested equity:
PNCL has built a lucrative BOT portfolio of seven projects with prudent traffic
assumptions and zero premium bids. We expect FY19 BOT revenues to rise to
Rs 4.35bn from Rs 4.1bn in FY18E, with FY19E debt of Rs 18.7bn (both stake
adjusted). We have also factored in additional value at 1.5x P/B from five HAM
projects with a bid project cost of Rs 63.1bn. We arrive at a FCFE-based valuation
of Rs 15.3bn after adjusting for a 20% holding company discount, leading to a price
to invested equity of 3.3x.
Valuations & view: Management is confident of attaining a topline of Rs 27bn/
Rs 35bn in FY19E/FY20E (EE Rs 23bn/30bn in FY19E/FY20E). High order book
visibility, probability of winning new projects due to a strong NHAI pipeline and
~Rs 71.9bn of HAM orders would imply a >25% revenue CAGR over FY17A-FY20E
with a low FY18E base. With a recent correction in the price, we believe valuations
are good for stock accumulation. Ramp-up in works and margins would be key
drivers to watch out for.
Key risks: Delay in issuing of ADs for new projects, lower-than-expected order
inflow and slower execution ramp-ups remain key downside risks.
Change in Standalone Estimates
% change over previous estimates
FY18E FY19E FY18E FY19E
Sales 16,936 23,835 0% 6%
EBITDA 2,444 3,450 -1% 6%
PAT 1,960 1,827 -2% 5%
EPS 7.6 7.1 -2% 5%
Standalone Financials
Rs. Mn YE Mar FY17A FY18E FY19E FY20E
Sales 16,891 16,936 23,835 30,636
EBITDA 2,210 2,444 3,450 4,438
Depreciation 533 760 881 1,016
Interest Expense 203 296 415 566
Other Income 466 204 130 95
Reported PAT 2,097 1,960 1,827 2,302
Recurring PAT 2,097 1,960 1,827 2,302
Total Equity 15,722 17,285 18,893 20,918
Gross Debt 1,473 2,425 4,840 4,920
Cash 355 1,211 887 649
Rs Per Share FY17A FY18E FY19E FY20E
Earnings 8.2 7.6 7.1 9.0
Book Value 61 67 74 82
Dividends 3 1 1 1
FCFF -14.6 -3.0 -6.7 4.1
P/E (x) 19.0 20.3 21.8 17.3
P/B (x) 2.5 2.3 2.1 1.9
EV/EBITDA (x) 19.3 17.9 13.5 10.5
ROE (%) 14% 12% 10% 12%
Core ROIC (%) 15% 14% 13% 15%
EBITDA Margin (%) 13% 14% 14% 14%
Net Margin (%) 12% 12% 8% 8%
PNC Infratech Absolute – ADD Relative – Benchmark 6% in 13 Months
______________________________________________________________________________________________________________________________________ March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 2 of 13
Key takeaways from meeting and site visit
Industry update
HA to EPC ratio for upcoming projects is expected to remain around 60%:40%.
Around 54 EPC projects worth Rs 360bn across 18 states are expected to be bid out
by NHAI till Mar’18 end.
MSRDC is targeting to bid out the Nagpur-Mumbai super expressway consisting of 16
packages and worth Rs 280bn by 31 Mar’18.
UPEIDA is also likely to bid out the 8 packages of the Lucknow-Balia expressway
(353kms and worth Rs 120bn) by Mar’18 end.
Total opportunity in EPC is expected to be around Rs 760bn.
In hybrid annuity, 73 projects worth Rs 650bn across 18 states are expected to be bid
out over the next 6-9 months.
Of the total pipeline, PNCL believes 70% of the projects would be bid out by Mar’18
while the rest might get delayed.
A BOT project, Hapur Bypass to Moradabad worth Rs 20bn, is likely to be bid out soon.
Under Bharatmala, approximately 24,800kms of roads are to be bid out by 2022.
Players like Tata projects and Reliance Infra have now been bidding very actively in
most projects. About 20-25 new companies (mostly regional players) are set to join
the bidding list over the next few quarters as the order book pipeline is very strong.
Competitive intensity is expected to drop in both HAM and EPC projects as all players
getting a good number of orders.
Of the total Rs 1,300bn of projects in the pipeline, PNCL has decided to bid for
Rs 200bn of projects (HA & EPC combined) and expects to win Rs 50bn-60bn by Mar’18.
Company update
PNCL currently has a portfolio of four toll, two annuity, five HAM projects, and one
OMT project. Of these 12, seven are fully operational. By FY18-end, PNCL expects AD
for all HAM and EPC projects, except for Chakeri-Allahabad.
PNCL targets 16% equity IRR in HA projects and 13-14% equity IRR in EPC projects.
Management aims to take the order book to Rs 150bn by Mar’18 and expects another
Rs 60-70bn of additional orders in FY19.
PNCL has a presence in UP, Uttarakhand, Rajasthan, MP, Bihar and Karnataka.
Gross block is set to reach Rs 7bn, on which a turnover of Rs 35nm-40bn is likely.
PNCL has enhanced its WC limits (fund and non-fund based) by Rs 1bn.
Borrowing cost for WC debt has been bought down from 10.4% to 8.8%.
SPV will also receive a bonus amount of Rs 340mn from NHAI for early completion of
the Rai-Bareli Jaunpur annuity project. 50% of the bonus would be passed on by the
SPV to PNCL standalone.
HAM projects: Set to add 2-3 HAM projects; land acquisition for most projects to be
completed in time
HAM projects would entail an investment of Rs 6bn in the upcoming three years.
PNCL plans to add another 2-3 projects in its HAM portfolio over the next six months.
The company has received early completion bonus of Rs 582mn (vs. Rs 1bn expected)
for the Agra-Lucknow expressway. The bonus was calculated at 0.04% of total
contract price for each day of early completion.
Land availability in HA projects
Project Name Land Availability till date
Dausa-Lalsot 90%
Chitradurga-Davanagere 75%
Jhansi-Khajuraho pckg. I 65%
Jhansi-Khajuraho pckg. II 76%
Chakeri Allahabad 60%
EPC projects: Most EPC projects to start contributing meaningfully by FY19
AD for most EPC projects is expected to be given by Mar’18 end.
PNCL is confident of bagging a few more EPC projects from the upcoming bid
pipeline but would not bid aggressively to win these projects. The company intends
to have reasonable rate of returns.
For Bihar projects, the cost escalation clause is clearly defined; hence, the company
would get all escalated costs from the authority.
Land availability in EPC projects
Project Name Land Availability till date
Nagina-Kashipur 80%
Koliwar-Bhojpur 75%
Varanasi-Gorakhpur 62% (expect 80% by Mar’18)
Aligarh-Moradabad 92%
Bhojpur-Buxar 78% (will receive AD at 80% availability)
PNC Infratech Absolute – ADD Relative – Benchmark 6% in 13 Months
______________________________________________________________________________________________________________________________________ March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 3 of 13
Guidance: FY19/FY20E to see strong revenue growth, EBITDAM to be at ~14%
Management has guided for FY18 revenue growth of around 7-8% but strong growth in
FY19 (Rs 27bn) and FY20 (Rs 35bn).
Variable costs in the construction industry would continue to increase, due to which
operating leverage would not be much.
EBITDA margins will remain close to 14%.
PNCL will participate in the airport runaway construction tenders as and when they
come up.
Currently, the company’s outstanding claims against the various authorities is around
Rs 6bn. It expects 50% of this amount to be awarded by the authority over the next
1-1.5 years.
PNCL expects 80IA reversals of Rs 380mn-390mn of the earlier year, while Rs 180-
190mn is expected from Kanpur-Lucknow-Ayodhya and Rs 600mn from Agra- Lucknow
projects. The company expects a total of Rs 1bn from the above in FY18. In FY18,
tax rate excluding reversals of earlier years would be around 12-15%, while would
remain at 18-21% in FY19E and FY20E. The company would be able to take 80IA
benefits for only those projects where work would have started before 31 Mar’18.
Total equity requirement for the current HA portfolio is around Rs 6bn, of which
Rs 500-600mn would be invested in Mar’18 and around Rs 1.2-1.5bn/year over the
next two years. The company would be looking to monetize its toll assets if it needs
to infuse any capital in new HA projects which it might win in the future.
Dausa Lalsot HA project – Site Visit
Project is located in the state of Rajasthan.
Concessionaire: PNC Rajasthan Highways Pvt. Ltd.; EPC contractor: PNC Infratech
Ltd.; Independent Engineer: M/s SAI-SYSTRA Group
Other salient features of the project:
Particulars
Appointed Date received on 31st May’17
Construction Period 910 Days
Scheduled Completion Date 27th Nov’19
Bid Project Cost Rs 8,810mn
EPC Cost Rs 7,450mn
Cumulative Financial Closure Achieved Rs 3,300mn (37.46%)
Project Length
83.453kms
(4 Lane - 34.250kms Cement Road; 2 Lane –
49.20kms Bituminous Road)
Land Availability 90% (74.953kms)
Earthwork Executed 4 Lane – 48.3%; 2 Lane – 77.9%
GSB Executed 4 Lane – 22.6%; 2 Lane – 76.1%
WMM Executed 2 Lane – 75.1%
DBM Executed 2 Lane – 71%
DLC Executed 4 Lane – 17.1%
PQC Executed 4 Lane – 8.3%
Around 2600cbm of cement is required for constructing 1km of a two-lane road.
The company sources 43 grade cement from UltraTech Cement.
The concrete mixture consists of around 15-16% of fly ash as well.
PNCL has a batching plant which can produce 120cbm of cement per hour.
Due to shortage in sand availability, PNCL has installed an aggregate washing plant
(at a cost of Rs 35mn) with a capacity of producing sand at 160ton/hour from
aggregate stone. The quality of sand produced from this process is far superior to the
normal sand but is around Rs 1000/ton costlier than normal sand.
PNCL keeps around three months of aggregate inventory available at the site.
PNC Infratech Absolute – ADD Relative – Benchmark 6% in 13 Months
______________________________________________________________________________________________________________________________________ March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 4 of 13
Site photographs
Exhibit 1: Concrete paver (Cost/paver: Rs 140mn-150mn)
Source: Company, Equirus Securities
Exhibit 2: Concrete laying in progress
Source: Company, Equirus Securities
Exhibit 3: Semi-finished concrete road
Source: Company, Equirus Securities
Exhibit 4: Cement batching plant, Site 1
Source: Company, Equirus Securities
PNC Infratech Absolute – ADD Relative – Benchmark 6% in 13 Months
______________________________________________________________________________________________________________________________________ March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 5 of 13
Exhibit 5: Aggregate washing plant, Site 1
Source: Company, Equirus Securities
Exhibit 6: Aggregate inventory, Site 1
Source: Company, Equirus Securities
PNC Infratech Absolute – ADD Relative – Benchmark 6% in 13 Months
______________________________________________________________________________________________________________________________________ March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 6 of 13
Valuations
Main changes in current and earlier SOTP valuations:
a) EPC business valuation higher by Rs 5/share: We have maintained the earlier 15x
TTM P/E multiple with a roll over to Mar’19.
b) Net valuation of the BOT portfolio reduced by Rs 3/share.
Exhibit 7: Earlier SOTP Valuation
Valuation Snapshot Rs. Mn Rs./share
EPC Business
Sep’18 TTM Sales 22,508
Sep’18 TTM Net Profit 1,741
Net Profit Margin 7.7%
P/E Multiple 15
Valuation of EPC Business (A) 26,122 102
Gross Valuation of BOT Projects 17,900 70
Ghaziabad Aligarh 3,815 15
Kanpur Kabrai 2,391 9
Gwalior Bhind 1,618 6
Narela Industrial Estate 992 4
BareilyAlmora 1,241 5
Rae Bareli Jaunpur 2,983 12
Kanpur Ayodhya 544 2
DausaLalsot 529 2
ChitradurgaDavanagere 860 3
Jhansi Khajuraho 846 3
Jhansi Khajuraho 786 3
Add/(Less): Adjustment 1,295 5
Net Valuation of PNC Infra BOT Portfolio (B) 19,195 75
Adj. for Holding Company Discount 15,356 60
Total Valuation (A) + (B) 41,478 162
Source: Equirus Securities
Exhibit 8: Current SOTP Valuation
Valuation Snapshot Rs. Mn Rs./share
EPC Business
Mar'19 TTM Sales 23,835
Mar19 TTM Net Profit 1,827
Net Profit Margin 7.7%
P/E Multiple 15
Valuation of EPC Business (A) 27,410 107
Gross Valuation of BOT Projects 17,062 67
Ghaziabad Aligarh 3,313 13
Kanpur Kabrai 2,359 9
Gwalior Bhind 1,583 6
Narela Industrial Estate 975 4
BareilyAlmora 1,033 4
Rae Bareli Jaunpur 2,938 11
Kanpur Ayodhya 543 2
DausaLalsot 529 2
Chitradurga Davanagere 860 3
Jhansi Khajuraho 846 3
Jhansi Khajuraho 786 3
Add/(Less): Adjustment 1,295 5
Net Valuation of PNC Infra BOT Portfolio (B) 18,357 72
Adj. for Holding Company Discount 14,686 57
Total Valuation (A) + (B) 42,096 164
Source: Equirus Securities
PNC Infratech Absolute – ADD Relative – Benchmark 6% in 13 Months
______________________________________________________________________________________________________________________________________ March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 7 of 13
Company Snapshot
How we differ from Consensus
- Equirus Consensus % Diff Comment
EPS FY18E 7.6 6.7 14 % We remain a bit conservative on the
FY19 execution vs. consensus FY19E 7.1 8.3 -14 %
Sales FY18E 16,936 17,938 -6 %
FY19E 23,835 26,406 -10 %
PAT FY18E 1,960 1,713 14 %
FY19E 1,827 2,114 -14 %
Our Key Investment arguments: (a) Challenges in FY18E on account of slow-moving
projects could impact margins and WC. (b) Valuations are ahead of performance.
Key Assumptions
Particulars 2016 2017 2018E 2019E 2020E
Revenues (Rs mn) 20,142 16,891 16,936 23,835 30,636
EBITDAM % 13.20% 13.09% 14.43% 14.47% 14.48%
PATM % 11.64% 12.41% 11.57% 7.67% 7.51%
Order book (Rs mn) 55,450 95,478 115,944 131,382 141,981
Net Fixed Asset Turns 9.52 6.03 4.69 6.34 7.72
Order book/Billing Ratio 2.75 5.65 6.85 5.51 4.63
Toll Collection 3,944 5,692 6,056 6,514 7,020
Risk to Our View
Faster-than-expected revenue growth and margin outperformance.
Key Triggers
Order book growth, better EBITDA margins, execution ramp-up
Sensitivity to Key Variables % Change % Impact on FY17 EPS
EBITDA Margins 1 % 5 %
Interest Rate -1 % 13 %
- - -
DCF Valuations & Assumptions
Rf Beta Ke Term. Growth Debt/IC in Term. Yr
6.7 % 1.0 12.7 % 3.0 % 47.8 %
- FY18E FY19E FY20-22E FY23-27E FY28-32E
Sales Growth 3 % 32 % 6 % 4 % 4 %
NOPAT Margin 18 % 10 % 11 % 9 % 9 %
IC Turnover 0.67 0.88 1.14 1.24 1.43
RoIC 10.5 % 8.7 % 11.5 % 11.3 % 13.0 %
Years of strong growth 1 2 5 10 15
Valuation as on date (Rs) 112 99 128 132 138
Valuation as of Mar'19 127 113 145 150 157
Based on DCF, assuming 10 years of 4% CAGR growth and 13% average ROIC, we derive
our current fair value of Rs138 and a Mar’19 fair value of Rs 157.
Company Description:
PNC Infratech is a mid-sized Infra EPC + Road BOT player with ~2 decades of experience
and proven expertise in execution of highway projects, bridges, flyovers, power
transmission lines, airport runways, industrial area development etc. Company currently
has 6 operational BOT projects and 1 OMT project. It has also bagged 5 Hybrid Annuity
Projects. It has presence across states like Rajasthan, Uttar Pradesh, Delhi, Bihar, WB,
MP, Karnataka, Tamil Nadu etc.
Comparable valuation Mkt Cap
Rs. Mn.
Price
Target
Target
Date
EPS P/E BPS P/B RoE Div Yield
Company Reco. CMP FY17A FY18E FY19E FY17A FY18E FY19E FY17A FY18E FY17A FY18E FY19E FY17A FY18E
PNC Infratech ADD 155 39,802 164 31st Mar'19 4.6 8.4 6.9 33.6 18.4 22.5 57.0 2.4 8 % 14 % 10 % 1.6 % 0.5 %
Ashoka Buildcon LONG 226 42,333 324 31st Mar'19 -0.5 13.7 21.3 -424.5 16.5 10.6 89.3 2.2 -1 % 14 % 20 % 0.4 % 0.9 %
KNR Constructions Reduce 295 41,503 316 30th Jun 19 4.5 16.8 15.1 65.1 17.5 19.5 57.9 4.0 8 % 26 % 19 % 0.0 % 0.4 %
PNC Infratech Absolute – ADD Relative – Benchmark 6% in 13 Months
______________________________________________________________________________________________________________________________________ March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 8 of 13
Standalone Quarterly Earnings Forecast and Key Drivers Rs in Mn 1Q17A 2Q17A 3Q17A 4Q17A 1Q18A 2Q18A 3Q18A 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E FY17A FY18E FY19E FY20E
Revenue 5,150 3,599 4,636 3,506 3,567 2,686 4,725 5,959 4,993 3,491 6,709 8,641 16,891 16,936 23,835 30,636
Operating Expenses 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Employees Cost 243 213 300 247 264 238 362 301 309 278 424 353 1,003 1,165 1,363 1,636
Periodic Maintenance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Other Expenses 483 370 507 452 399 286 502 592 475 340 592 698 1,812 1,779 2,106 2,561
EBITDA 671 464 602 475 520 397 663 865 714 394 930 1,412 2,210 2,444 3,450 4,438
Depreciation 121 134 138 140 175 184 196 204 210 217 223 230 533 760 881 1,016
EBIT 550 329 464 335 344 212 467 661 503 178 706 1,182 1,677 1,685 2,569 3,422
Interest 22 58 40 84 80 77 65 74 80 103 112 121 203 296 415 566
Other Income 174 101 85 106 55 52 57 40 28 33 36 33 466 204 130 95
PBT 702 372 509 357 319 188 459 627 452 108 630 1,094 1,940 1,593 2,284 2,952
Tax 63 19 -258 19 21 21 -472 63 90 22 126 219 -157 -367 457 649
Recurring PAT 640 352 767 338 298 167 931 564 361 87 504 875 2,097 1,960 1,827 2,302
Extraordinary 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Reported PAT 640 352 767 338 298 167 931 564 361 87 504 875 2,097 1,960 1,827 2,302
EPS (Rs) 2.49 1.37 2.99 1.32 1.16 0.65 3.63 2.20 1.41 0.34 1.97 3.41 8.17 7.64 7.12 8.97
Key Drivers
Order book (in Rs mn) 95,478 115,944 131,382 141,981
EBITDAM % 13 % 14 % 14 % 14 %
Order Book/TTM Revenues 5.70 6.85 5.51 4.63
Interest Coverage 8.26 5.69 6.19 6.05
Debt Equity 0.09 0.14 0.26 0.24
Non cash WC/Sales 35 % 37 % 32 % 31 %
Sequential Growth (%)
Revenue -13 % -30 % 29 % -24 % 2 % -25 % 76 % 26 % -16 % -30 % 92 % 29 % - - - -
Construction Expenses -10 % -32 % 26 % -28 % 2 % -26 % 81 % 31 % -17 % -29 % 92 % 30 % - - - -
EBITDA -17 % -31 % 30 % -21 % 9 % -24 % 67 % 31 % -17 % -45 % 136 % 52 % - - - -
EBIT -11 % -40 % 41 % -28 % 3 % -38 % 120 % 41 % -24 % -65 % 298 % 67 % - - - -
Recurring PAT -56 % -45 % 118 % -56 % -12 % -44 % 459 % -39 % -36 % -76 % 483 % 73 % - - - -
EPS -56 % -45 % 118 % -56 % -12 % -44 % 459 % -39 % -36 % -76 % 483 % 73 % - - - -
Yearly Growth (%)
Revenue 19 % -23 % -11 % -40 % -31 % -25 % 2 % 70 % 40 % 30 % 42 % 45 % -16 % 0 % 41 % 29 %
EBITDA 12 % -24 % -11 % -41 % -23 % -14 % 10 % 82 % 37 % -1 % 40 % 63 % -17 % 11 % 41 % 29 %
EBIT 14 % -29 % -14 % -46 % -37 % -35 % 1 % 97 % 46 % -16 % 51 % 79 % -20 % 0 % 53 % 33 %
Recurring PAT 145 % 15 % 136 % -77 % -53 % -53 % 21 % 67 % 21 % -48 % -46 % 55 % -11 % -7 % -7 % 26 %
EPS 145 % 15 % 136 % -77 % -53 % -53 % 21 % 67 % 21 % -48 % -46 % 55 % -11 % -7 % -7 % 26 %
Margin (%)
EBITDA 13 % 13 % 13 % 14 % 15 % 15 % 14 % 15 % 14 % 11 % 14 % 16 % 13 % 14 % 14 % 14 %
EBIT 11 % 9 % 10 % 10 % 10 % 8 % 10 % 11 % 10 % 5 % 11 % 14 % 10 % 10 % 11 % 11 %
PBT 14 % 10 % 11 % 10 % 9 % 7 % 10 % 11 % 9 % 3 % 9 % 13 % 11 % 9 % 10 % 10 %
PAT 12 % 10 % 17 % 10 % 8 % 6 % 20 % 9 % 7 % 2 % 8 % 10 % 12 % 12 % 8 % 8 %
PNC Infratech Absolute – ADD Relative – Benchmark 6% in 13 Months
______________________________________________________________________________________________________________________________________ March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 9 of 13
Consolidated Financials Forecast
P&L (Rs Mn) FY17A FY18E FY19E FY20E
Balance Sheet (Rs Mn) FY17A FY18E FY19E FY20E
Cash Flow (Rs Mn) FY17A FY18E FY19E FY20E
Revenue 22,523 23,277 30,653 37,982 Equity Capital 513 513 513 513 PBT 922 1,964 2,303 4,048
Op. Expenditure 16,283 17,627 24,513 29,843 Reserve 14,097 16,025 17,576 20,668 Depreciation 2,416 2,009 2,191 2,395
EBITDA 6,241 5,651 6,140 8,139 Networth 14,610 16,538 18,089 21,181 Others 3,054 0 0 0
Depreciation 2,416 2,009 2,191 2,395 Long Term Debt 17,947 17,689 18,783 17,314 Taxes Paid -97 -312 538 761
EBIT 3,825 3,642 3,949 5,744 Def Tax Liability 14,078 3,779 4,203 4,627 Change in WC -3,444 -2,035 -1,307 -1,961
Interest Expense 3,102 1,882 1,776 1,792 Minority Interest 0 0 0 0 Operating C/F 2,851 2,249 2,649 3,721
Other Income 406 204 130 95 Account Payables 2,768 3,155 4,245 5,456 Capex -2,067 11,495 -919 -1,399
PBT 1,129 1,964 2,303 4,048 Other Curr Liabi 3,404 2,689 3,784 4,863 Change in Invest 205 -1,580 -3,207 -288
Tax -261 -312 538 761 Total Liabilities & Equity 52,807 43,849 49,104 53,441 Others -154 0 0 0
PAT bef. MI & Assoc. 1,390 2,276 1,765 3,287 Net Fixed Assets 24,048 22,433 21,158 20,159 Investing C/F -2,015 9,915 -4,126 -1,687
Minority Interest 0 0 0 0 Capital WIP 78 32 34 37 Change in Debt 1,917 -258 1,095 -1,470
Profit from Assoc. -207 -112 6 82 Others 17,103 6,840 10,047 10,335 Change in Equity 0 0 0 0
Recurring PAT 1,183 2,164 1,771 3,369
Inventory 1,535 2,132 3,000 3,856 Others -3,263 -10,648 211 229
Extraordinaires 0 0 0 0 Account Receivables 6,524 6,032 7,510 9,652 Financing C/F -1,346 -10,906 1,305 -1,240
Reported PAT 1,183 2,164 1,771 3,369 Other Current Assets 2,378 3,980 5,126 6,378 Net change in cash -510 1,259 -172 795
FDEPS (Rs) 4.6 8.4 6.9 13.1 Cash 1,141 2,400 2,228 3,023 RoE (%) 8 % 14 % 10 % 17 %
DPS (Rs) 2.5 0.8 0.7 0.9 Total Assets 52,807 43,849 49,104 53,441
RoIC (%) 7 % 8 % 7 % 11 %
CEPS (Rs) 14.8 16.7 15.4 22.1 Non-cash Working Capital 4,265 6,300 7,607 9,568
Core RoIC (%) 11 % 10 % 9 % 13 %
FCFPS (Rs) 11.2 52.3 -1.2 12.5 Cash Conv Cycle 69.1 98.8 90.6 91.9 Div Payout (%) 14 % 11 % 12 % 8 %
BVPS (Rs) 57.0 64.5 70.5 82.6 WC Turnover 5.3 3.7 4.0 4.0 P/E 33.6 18.4 22.5 11.8
EBITDAM (%) 28 % 24 % 20 % 21 % FA Turnover 0.9 1.0 1.4 1.9 P/B 2.7 2.4 2.2 1.9
PATM (%) 5 % 9 % 6 % 9 % Net D/E 1.2 0.9 0.9 0.7 P/FCFF 13.8 3.0 -130.5 12.4
Tax Rate (%) -23 % -16 % 23 % 19 % Revenue/Capital Employed 0.5 0.6 0.8 0.9 EV/EBITDA 11.3 10.4 9.9 7.2
Sales Growth (%) -21 % 3 % 32 % 24 %
Capital Employed/Equity 3.2 2.7 2.3 2.1
EV/Sales 3.1 2.5 2.0 1.5
FDEPS Growth (%) -43 % 83 % -18 % 90 %
Dividend Yield (%) 1.6 % 0.5 % 0.5 % 0.6 %
PNC Infratech Absolute – ADD Relative – Benchmark 6% in 13 Months
______________________________________________________________________________________________________________________________________ March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 10 of 13
Historical Consolidated Financials
P&L (Rs Mn) FY14A FY15A FY16A FY17A
Balance Sheet (Rs Mn) FY14A FY15A FY16A FY17A
Cash Flow (Rs Mn) FY14A FY15A FY16A FY17A
Revenue 13,599 18,609 28,368 22,523 Equity Capital 398 398 513 513 PBT 852 1,393 1,644 922
Op. Expenditure 11,845 15,809 22,144 16,283 Reserve 6,699 7,016 13,065 14,097 Depreciation 402 603 2,127 2,416
EBITDA 1,754 2,800 6,223 6,241 Networth 7,097 7,414 13,578 14,610 Others 551 864 2,741 3,054
Depreciation 402 603 2,127 2,416 Long Term Debt 10,250 16,325 16,013 17,947 Taxes Paid 0 0 -2 -97
EBIT 1,353 2,196 4,096 3,825 Def Tax Liability 1,061 15,470 14,262 14,078 Change in WC -417 -393 -5,571 -3,444
Interest Expense 609 925 2,574 3,102 Minority Interest 1 1 1 0 Operating C/F 1,388 2,468 940 2,851
Other Income 108 121 247 406 Account Payables 875 1,111 2,046 2,768 Capex -5,420 -9,862 -2,017 -2,067
PBT 852 1,393 1,769 1,129 Other Curr Liabi 922 2,113 2,971 3,404 Change in Invest -128 114 435 205
Tax 346 479 -443 -261 Total Liabilities & Equity 20,206 42,433 48,870 52,807 Others 0 70 -121 -154
PAT bef. MI & Assoc. 506 914 2,212 1,390 Net Fixed Assets 6,489 16,527 24,472 24,048 Investing C/F -5,547 -9,678 -1,703 -2,015
Minority Interest -45 0 0 0 Capital WIP 5,926 8,071 19 78 Change in Debt 4,415 6,674 -331 1,917
Profit from Assoc. 0 0 -126 -207 Others 1,969 10,330 14,507 17,103 Change in Equity 742 810 4,172 0
Recurring PAT 552 914 2,087 1,183 Inventory 1,048 2,225 2,364 1,535 Others -577 -1,018 -2,667 -3,263
Extraordinaires 0 0 0 0 Account Receivables 1,917 3,021 4,106 6,524 Financing C/F 4,580 6,466 1,174 -1,346
Reported PAT 552 914 2,087 1,183 Other Current Assets 1,574 1,839 2,235 2,378 Net change in cash 421 -745 412 -510
EPS (Rs) 2.2 3.6 8.1 4.6 Cash 1,284 421 1,169 1,141
RoE (%) 9 % 13 % 20 % 8 %
DPS (Rs) 0.0 1.5 2.5 2.5
Total Assets 20,206 42,433 48,870 52,807
RoIC (%) 6 % 5 % 9 % 7 %
CEPS (Rs) 3.5 5.9 16.9 14.8 Non-cash Working Capital 2,742 3,860 3,687 4,265 Core RoIC (%) 6 % 5 % 13 % 11 %
FCFPS (Rs) -94.4 -25.7 3.6 11.2 Cash Conv Cycle 73.6 75.7 47.4 69.1 Div Payout (%) 6 % 10 % 8 % 14 %
BVPS (Rs) 27.7 28.9 52.9 57.0 WC Turnover 5.0 4.8 7.7 5.3
P/E 72.1 43.5 19.1 0.0
EBITDAM (%) 13 % 15 % 22 % 28 % FA Turnover 1.1 0.8 1.2 0.9 P/B 5.6 5.4 2.9 0.0
PATM (%) 4 % 5 % 7 % 5 % Net D/E 1.3 2.1 1.1 1.2 P/FCFF -1.6 -6.0 42.5 13.8
Tax Rate (%) 41 % 34 % -25 % -23 % Revenue/Capital Employed 0.9 0.6 0.7 0.5 EV/EBITDA 29.0 30.9 13.4 0.0
Sales growth (%) 4 % 37 % 52 % -21 %
Capital Employed/Equity 2.4 4.0 4.0 3.2
EV/Sales 3.7 4.7 2.9 0.0
FDEPS growth (%) -26 % 66 % 128 % -43 %
Dividend Yield (%) 0.0 % 1.0 % 1.6 % 1.6 %
PNC Infratech Absolute – ADD Relative – Benchmark 6% in 13 Months
______________________________________________________________________________________________________________________________________ March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 11 of 13
Equirus Securities
Research Analysts Sector/Industry Email
Equity Sales E-mail
Abhishek Shindadkar IT Services [email protected] 91-22-43320643 Vishad Turakhia [email protected] 91-22-43320633
Ashutosh Tiwari Auto, Metals & Mining [email protected] 91-79-61909517 Subham Sinha [email protected] 91-22-43320631
Depesh Kashyap Mid-Caps [email protected] 91-79-61909528 Viral Desai [email protected] 91-22-43320635
Devam Modi Power & Infrastructure [email protected] 91-79-61909516 Viraj Mehta [email protected] 91-22-43320634
Dhaval Dama FMCG, Mid-Caps [email protected] 91-79-61909518 Rushabh Shah [email protected] 91-22-43320632
Manoj Gori Consumer Durables [email protected] 91-79-61909523 Dealing Room E-mail
Maulik Patel Oil and Gas [email protected] 91-79-61909519 Ashish Shah [email protected] 91-22-43320662
Praful Bohra Pharmaceuticals [email protected] 91-22-43320611 IleshSavla [email protected] 91-22-43320666
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Meet Chande [email protected] 91-79-61909513 Corporate Communications E-mail
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Vikas Jain [email protected] 91-79-61909531
Rating & Coverage Definitions: Absolute Rating • LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap >Rs 5 billion and ATR >= 20% for rest of the companies • ADD: ATR >= 5% but less than Ke over investment horizon • REDUCE: ATR >= negative 10% but <5% over investment horizon • SHORT: ATR < negative 10% over investment horizon Relative Rating • OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon • BENCHMARK: likely to perform in line with the benchmark • UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon Investment Horizon Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on last day of a calendar quarter. Lite vs. Regular Coverage vs. Spot Coverage We aim to keep our rating and estimates updated at least once a quarter for Regular Coverage stocks. Generally, we would have access to the company and we would maintain detailed financial model for Regular coverage companies. We intend to publish updates on Lite coverage stocks only an opportunistic basis and subject to our ability to contact the management. Our rating and estimates for Lite coverage stocks may not be current. Spot coverage is meant for one-off coverage of a specific company and in such cases, earnings forecast and target price are optional. Spot coverage is meant to stimulate discussion rather than provide a research opinion.
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PNC Infratech Absolute – ADD Relative – Benchmark 6% in 13 Months
______________________________________________________________________________________________________________________________________ March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 12 of 13
© 2018 Equirus Securities Private Limited. All rights reserved. For Private Circulation only. This report or any portion hereof may not
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Analyst Certification
I, Devam Modi, author to this report, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also
certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Disclosures
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Capital Market (Reg. No. INB231301731), Futures & Options Segment (Reg. No.INF231301731) of the National Stock Exchange of India Ltd. (NSE) and on Cash Segment (Reg. No.INB011301737) of Bombay Stock
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Regulations, 1993 (Reg. No. INP000005216) and as a Depository Participant of the Central Depository Services (India) Limited (Reg. No. IN-DP-324-2017). There are no disciplinary actions taken by any regulatory
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(c) has not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (d) has not received any compensation for products
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PNC Infratech Absolute – ADD Relative – Benchmark 6% in 13 Months
______________________________________________________________________________________________________________________________________ March 11, 2018 Analyst: Devam Modi [email protected] (+91 – 90999 87467) Page 13 of 13
A graph of daily closing prices of securities is available at http://www.nseindia.com/ChartApp/install/charts/mainpage.jsp and www.bseindia.com (Choose a company from the list on the browser and select the
“three years” period in the price chart).
Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest
Research Analyst’ or Relatives’ financial interest No
Research Analyst’ or Relatives’ actual/beneficial ownership of 1% or more No
Research Analyst’ or Relatives’ material conflict of interest No
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