PNC Infra shares jump 8% as company bags Rs 819 crore order

Shares of PNC Infratech rallied as much as 8 per cent during the early trading session on Tuesday after the company emerged as the lowest bidder (L1) in a ministry of road transport and highways (Morth) highway project worth Rs 819 crore.

PNC Infra has bagged the order from the ministry for constructing a four-lane highway from Singraur Uphar to Baranpur Kadipur Ichauli) in Uttar Pradesh under hybrid annuity mode, the company informed the bourses.

"PNC Infratech has been declared the L1 (lowest) bidder for a Highway Project namely 'construction of a 4-lane highway from Km 49.155 to Km 74.700 (Singraur Uphar to Baranpur Kadipur Ichauli) of NH-731A with paved shoulders in the state of Uttar Pradesh on hybrid annuity mode," the company said in an exchange filing.

Following the announcement, shares of PNC Infratech jumped about 8 per cent to Rs 286.30 on Tuesday, before trading at Rs 282 at 11.45 am. The scrip had settled at Rs 265.40 on Monday. The company was commanding a market cap close to Rs 7,250 crore.

Shares of PNC Infra have advanced about 15 per cent in the last six months, whereas the stock is 20 per cent up in the last one year. However, the civil construction firm's stock is down about 10 per cent on a year-to-date basis so far.

As per the details of the highway project, it is to be constructed in 24 months and operated for 15 years after construction. Price bidding for the said project was opened on Monday, March 27, 2023, and PNC Infratech was selected as the L1 bidder, the company's filing said.

Prior to this, the company recently bagged multiple orders from the National Highway Authority of India (NHAI) in states like Bihar and Uttar Pradesh under a hybrid annuity model.

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.

In their reports released earlier this month, 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 the 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 projects 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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