I am exploring PNC Infratech for investment considering the govt focus on road building… Please can someone highlight reasons for revenue being down for 1H for PNC on YtY basis and if there is a management guidance for 2nd half or full year.
Disc : Invested in Dilip Buildcon and interested to add more funds into other road building companies considring the sector potential
You can also consider KNR constructions. Strong Balance sheet, good execution and a very strong presence on South India. Gives a complementary advantage as Dilip Buildcon is strong in North. Definitely they will do very good over next one year.
In this sector, I understand, Dilip Buildcon is the best.It scores above the others in Equipment ownership, cluster bidding and good management. Hence it is characterized by Early completion bonus in most of the contracts.
PNC Housing has had delays due to land acquisition by NHAI in it’s HAM
projects. Management in the concall has indicated that worst is behind it.
H2 should be better. And FY19 should be very good.
Disc : Invested from much lower levels.
Mr. Naveen Jain won Agra Mayor seat in recent U.P elections.
He was the person who handles all political contacts for the company earlier he was deputy Mayor. As per my understanding this change will help company in future…
Taxes are exempted till 31st march 2018 and i believe company has to pay taxes from next financial year. This will have impact on profitability…
PNC INFRATECH has been declared as the ‘L1’ bidder with Bid Project cost of Rs. 1,197 crores for NHAI project of 4-laning of Aligarh-Kanpur section of NH - 91 in Uttar Pradesh under NHDP Phase-IV to be executed on Hybrid Annuity Mode.
PNC reported 106.2% yoy growth in standalone revenue driven by pickup in execution of its projects as it has received appointed date in most of the projects and moved well in terms of execution.
EBITDA margin at 17.6% was driven by certain one-off which includes, early completion bonus of Rs 253 mn related to Raebareli Jaunpur project which was completed ahead of schedule. Adjusted for this, EBITDA margin was at 14.7%.
PNC has robust order book of Rs 157.5 bn (including HAM projects & new EPC projects of Rs 91.3 bn) which is ~8.5x its FY18 revenue, gives strong revenue growth visibility for the next 3 years. Further, the company is targeting to add another Rs 20-25 bn of new orders in 9MFY19 depending upon new bids from NHAI and state government.
PNC has maintained its revenue growth guidance of over 40% CAGR in FY18- 20E on conservative basis with EBITDA margins of 13.5-14% and may review the same in Q3FY19 considering strong order inflows.
The company reported Rs 5.8 mn per day toll revenue in Ghaziabad Aligarh BOT projects in Q1FY19. With this toll revenue the company is able to service interest cost of the projects however it requires equity infusion for repayment of principal. The company intends exiting the project in future. It has Rs 1.28
mn toll per day in MP highways and Rs 1.17 mn in Bareilly Almora.
The company has reduced working capital at the end of Q1FY19 by 20 days on qoq.
The company has standalone debt of Rs 2.5 bn with low debt to equity ratio of 0.1x.
The company targets to do capex of Rs 2.5 bn in FY19E in order to execute its orders
Management has finally started to walk the talk. Very encouraging results. Such results do the give the confidence to continue to hold on. Let’s hope they don’t bid too aggressively in future tenders.
Disc: Invested
PNC Infratech
Annual Report KTAs– Strong all-round performance
Financial and valuation summary
Please find below the key highlights of PNC’s FY20 Annual Report.
Strong overall performance: FY20 standalone Revenue/ PAT grew 55.3%/ 36% yoy to Rs47.7bn/ Rs3.3bn driven by strong OB. Gross Debt reduced by Rs480m to Rs3.3bn while cash levels surged to Rs7.4bn led by higher mobilization advances (up Rs2.8bn yoy) and improved recoveries. Consolidated PAT grew 56%yoy to Rs5.5bn.
Net working capital levels fall; good recovery in external receivables: NWC levels (ex-cash, ex-loans/sub-debt to subs) declined sharply to 15 days in FY20 from 67 days in FY19 but are likely to revert to 60-65 days in FY21. Receivables rose to Rs8bn from Rs6.2bn but reduced from 73 days to 61 days of revenue. Receivables from
own SPVs at Rs6.2bn were 77% of the total with third party receivables declining from Rs4.5bn in FY19 to Rs1.8bn FY20.
Equity of Rs9.1bn invested in assets; rise in financial support to SPVs: Equity investments (including sub-debt) for the asset portfolio increased by Rs2.1bn to Rs9.1bn in FY20. Balance equity commitment stands at Rs10bn (as of June-20) for the entire portfolio. Unsecured loans to subs/associates increased by Rs1.2bn to Rs3.6bn in FY20. This comprises of increase of Rs1.18bn on conversion of advance against warrants into sub-debt for Ghaziabad Aligarh project (no cash impact due to reduction in other non-current/current assets), Rs520m additional support to Ghaziabad-Aligarh, Rs300m additional support to Bareilly-Almora and return of loan of Rs760m by Narela SPV due to cashflow from arbitration award.
Sufficient unutilized banking limits: As of Mar-20, BG limits utilized were Rs25.4bn and CG limits utilized were Rs693m (CG given for Ghaziabad-Aligarh project). Undrawn CC limits were Rs10bn and undrawn BG limits were Rs24.6bn in Mar-20.
Compensation to KMPs rises sharply due to commission on profits: While gross salary of KMPs increased by 11%, overall remuneration to KMPs rose from Rs65m in FY19 to Rs238m in FY20 due to commission of Rs165m (@5% of FY19 PAT; NIL in FY19). The KMP remuneration is within the prescribed limit of 10% of PAT.
Arbitration awards: PNC has arbitration awards worth Rs380m in favor pertaining to two projects. However, clients have appealed against the awards.
Subsidiaries’ performance: Narela reported strong earnings growth by receipt of arbitration award and Kanpur-Ayodhya saw sharp rise in PAT led by lower interest/ depreciation costs. Bareilly-Almora continued to report loss due to lower revenue.
Strong growth along with lean balance sheet; Despite a sharp rise in execution in FY20, PNC has kept it balance sheet lean with robust cash generation and wcap in check.
PNC’s Book to Bill is lowest among it’s peers. Company needs to shore up it’s order book fast.
PNC Infratech Limited, SPML Infra JV receives LOA for Rural Water Supply Project (EPC) for Rs. 952.0 crore
PNC Infratech Limited in Joint Venture with SPML Infra Limited, announces receipt of Letter of Acceptance (LOA) for an EPC Project namely “Survey, Design, Preparation of DPR, Construction, Commissioning and O&M for 10 years of Rural Water Supply Project in 952 villages in Devipatan Division of Uttar Pradesh” from the State Water Supply & Sanitation Mission, Namami Gange & Rural Water Supply Department on 10 December 2020. Approximate value of the Project is Rs. 952.0 crore and specific value will be known at the time of agreement, after preparation and approval of DPR for the Project. PNC Infratech’s share in the JV is 95%
Today CN infrabuild has sold bulk of their holdings of PNC at Rs. 175 and these were bought by host of different mutual funds including BNP, Axis, Nomura, Goldman amongst others.
Quick Screener search reveals 9.95% holding last Qtr for CN Infra.
The company has Contingent Liabilities amounting to approx. Rs 3100 Cr which is greater than shareholder’s equity.
Does anyone have any idea, what is it about ?
Disc : Not invested but tracking closely.
Normally these are bank guarantees issued for taking order and mobilisation advance. Also includes performance guarantees post completion of the project for certain period. Part of the business.
Might be… but I don’t see it as the only reason as a similar trend is not present in its peers operating in road infra segment such as KNR Constructions where these liabilities are significantly lower.
Must be reporting issues. Bank Guarantees are integral part of EPC business.
PNC Infratech vs Gayatri Projects. I think investors have gone overboard on PNC Infratech
PNC Infratech has been a stock that demands a re-rating. It has an order book of around 17,850 crores, the company is sitting on cash equivalents of 548.9 crores at the end of March, 2020, which is most likely to increase over 20% given the number of orders it has closed this year.
Government’s commitment towards infrastructure was crystal clear. Here are few points that made me invest even more in this company:
(for the period 2018-2020)
PNC largely operates from UP, which will see a huge spending on infrastructure, since the state hasn’t seen its share of development it deserves. Plus the company’s commitment of diversifying its business operations segmentally and geographically makes the stock mouth watering.
