PNC Infratech shares zoom on order win; stock available at discount of 36% from highs — should you buy?

Shares of PNF Infratech – a construction and engineering company – on Tuesday jumped as high as 9 per cent to Rs 289.45 per share on the BSE after it won an order of Rs 819.0 crore from the Ministry of Road Transport & Highways on Monday. 

"PNC Infratech Limited has been declared the L1 (Lowest) bidder for a Highway Project namely ‘Construction of 4-lane highway from Km 49.155 to Km 74.700 (Singraur Uphar to Baranpur Kadipur Ichauli) of NH-731A with paved shoulders (i/c Ganga Bridge) in the state of Uttar Pradesh on Hybrid Annuity Mode’ from MORT&H with a Bid Project Cost of Rs. 819.0 crore," the company said in a filing. 

At around 02:00 PM, PNC Infratech's shares were quoted at Rs 287.75 per share, up Rs 22.35 or 8.42 per cent from Monday’s closing of Rs 265.40 apiece.

It has a 52-week high-low range of Rs 354.5-219.3 apiece. 

The counter breached Zee Business’ target of Rs 272 apiece, which was set earlier this morning in the traders’ diary with a stop loss of Rs 261 per share. 

According to Avinash Gorakshakar, a Zee Business panellist , the government’s focus on infrastructure is razor sharp, and order momentum is expected to rise going forward.

He said this is eventually good news for L1 bidders like PNC Infratech as the order book gives visibility to strong revenue. 

The market analyst also mentioned that the medium-term growth in PNC Infratech is positive, mainly on the back of improving margins amid softening of input costs.  

Domestic brokerage firm Sharekhan retains a ‘buy’ rating on PNC Infratech with a target price of Rs 390 per share, implying an upside of 47 per cent.

This is mainly considering the favourable risk-reward ratio, and it is one of the key beneficiaries of a positive sector outlook. 

Road project awards and construction activities picked up in January 2023 with a 2.2x month-on-month (MoM) jump, and a 2.6x (MoM) rise, respectively, the brokerage said, expecting strong project awards during the fourth quarter of this fiscal. 

PNC Infratech is an infrastructure construction, development, and management company with expertise in implementing projects, including highways, bridges, flyovers, airport runways, industrial areas, and power transmission lines. 

The company provides engineering, procurement, and construction (EPC) services on a fixed-sum turnkey basis and an item-rate basis.

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