PNC Infratech shares climb 5% after company secures order worth ₹699 crore

Shares of PNC Infratech, an infrastructure company, surged by 5% to reach an all-time high of ₹469 per share during Tuesday's intraday trading session. This spike came after the company in an exchange filing said that it had been awarded a Letter of Acceptance from the Madhya Pradesh Public Works Department. 

The LoA pertains to the construction of a four-lane elevated corridor/flyover from Maharani Laxmibai Pratima to A.B. Road (N.ll. 46) near Girwai Police Chouki on the Swarn Rekha River in Gwalior City (2nd phase) in the state of Madhya Pradesh, to be executed on an engineering, procurement, and construction (EPC) basis. The total value of the order stands at ₹699 crore.

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In January, PNC Infratech was also awarded the contract for the construction of the Western Bhopal Bypass, involving the development of a 4-lane road with paved shoulders along with service roads. The total project cost for this endeavor amounts to ₹1174 crore.

The company has developed itself as one of the premier EPC players in the road sector over the years and has also diversified its revenue stream to other segments, including water supply and irrigation.

It is well-positioned to capitalise on the government’s ambitious plans to develop highways and expressways. The National Highways Authority of India (NHAI) is prioritising greenfield expressways, offering significant potential in both EPC and HAM modes.

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Government initiatives like Bharatmala Pariyojana, Sagarmala, the Atal Mission for Rejuvenation and Urban Transformation, the Jal Jeevan Mission, and the Prime Minister’s Gati Shakti National Master Plan are set to boost the infrastructure sector, as per the domestic brokerage firm Axis Securities. 

The company shares have been yielding positive returns over the last 3 years, and this year so far they are up by 30%. 

In Q3 FY24, the company posted a 32.14% YoY rise in its consolidated net profit to ₹185 crore as compared to ₹140 crore in the year-ago quarter. The revenue from operations increased by 13.53% YoY to ₹2,047 crore in Q3 FY24 from ₹1,803 crore in Q3 FY23.

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The operating profit surged to ₹432 crore from 345 crore, a growth of 25% YoY, while the operating profit margin came in at 21%, an expansion of 300 bps YoY.

Following the company's Q3 performance, Axis Securities retained its 'buy' call on the stock with a target price of ₹510 apiece. HDFC Securities also kept its 'buy' call on the stock with an unchanged target price of ₹520 apiece.

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