Report

INITIATING COVERAGE
30 MAR 2016
PNC Infratech
BUY
INDUSTRY
INFRASTRUCTURE
CMP (as on 29 Mar 2016)
Rs 496
Target Price
Rs 625
Nifty
7,597
Sensex
24,900
KEY STOCK DATA

Bloomberg
PNCL IN
No. of Shares (mn)
51
MCap (Rs bn) / ($ mn)
25/382
6m avg traded value (Rs mn)
19
STOCK PERFORMANCE (%)

52 Week high / low
Rs 558/346
3M
6M
12M
Absolute (%)
(7.1)
1.9
Relative (%)
(2.6)
5.3
SHAREHOLDING PATTERN (%)

Promoters
56.07
FIs & Local MFs
19.33
FIIs
Public & Others
3.42
21.18
Source : BSE
Parikshit D Kandpal
parikshitd.kandpal@hdfcsec.com
+91-22-6171-7317
Prabhat Anantharaman
prabhat.anantharaman@hdfcsec.com
+91-22-6171-7319
Raring to grow
PNC Infratech (PNC) is a road-focused EPC player
with a strong execution track record. It is on the cusp
of a new growth phase as ~60% of NHAIs upcoming
bid pipeline is spread across PNC-dominated states,
with UP alone contributing 32.6%. PNCs approach is
conservative (selective on BoT bids) and tightly
focused on margins and cash flows in the EPC
segment of the business.
As India enters a cyclical recovery in government-led
EPC spends over FY16-18E, we expect PNCs order
book/APAT to grow ~1.6/1.4x. We think PNCs
capital and bid conservativeness will be more visible
as the business ramps up. Initiate coverage with
BUY. Our SOTP-based TP is Rs 625/sh, valuing the
core EPC business at 15x FY18E EPS and BOT
portfolio at Rs 130/sh (DCF, implying 1.4x BV).
Investment arguments
Conservative bids provide margin comfort: PNC
ranks high on bidding discretion, with its

cumulative NHAI EPC contract award value being
7.2% higher than the benchmark cost vs. even
Sadbhav Engg (which is 1.4% lower). This provides
comfort on EBIDTA margin guidance of 13-13.5%.
The early-completion bonus for the Agra-Lucknow
project can add Rs 1bn to FY17E PBT.
Cluster-based strategy limits capex: Most of
PNCs projects, including BOTs, are concentrated
in UP. Business has remained focused on UP and
neighbouring states, thereby ensuring a tight
control on execution. This partly explains the high

gross asset turn of 4.2x in FY16E.
Strong WC cycle, high earnings quality: PNCs
debtor days went down to ~86 in FY15 from ~109
in FY14. With the uptick in the execution cycle,
9mFY16 debtor days further reduced to ~76. This
resulted in a cash conversion cycle of 144 days for
9mFY16 vs. 154 days in FY15. The standalone
balance sheet is healthy (net D/E 0.03x in FY16E).
Robust BOT portfolio: PNCs 9mFY16 BOT toll
collections grew 30% in the Gwalior-Bhind project
and 16% YoY in the Kanpur-Ayodhya OMT project.
PNC has guided for FY16E toll revenue of Rs 3.53.7bn vs. our estimate of Rs 3.6bn. We value the
BOTs at Rs 130/sh (1.4x BV).
Near-term outlook: With (1) Strong ordering
potential in home location, (2) Ramp-up in BOT
traffic, (3) Healthy balance sheet, and (4) Betterthan-peer EBIDTA margins and (5) Expected order
inflows; the stock should remain buoyant in the
near term.
Financial Summary (Standalone)
(Rs mn)
Net Revenues
EBITDA
APAT
Diluted EPS (Rs)
P/E (x)
EV/EBIDTA (x)
RoE (%)
FY15
15,610
2,166
954
24.0
20.7
10.6
14.9
FY16E
19,375
2,595
1,184
23.1
21.5
9.9
12.4
FY17E
22,692
3,014
1,425
27.8
17.9
8.8
11.0
FY18E
26,893
3,583
1,696
33.1
15.0
7.7
11.7
Source : Company, HDFC sec Inst Research
HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters
PNC INFRATECH: INITIATING COVERAGE
Contents
Capitalising on robust roads order pipeline ...................................................................................................................... 3
Huge opportunity in PNC dominated states ...................................................................................................................... 4
Conservative bids provide margin comfort ....................................................................................................................... 5
Policy interventions to improve project awards & execution ............................................................................................ 6
Hybrid Annuity Model Next big driver of PPP projects ................................................................................................... 7
HAM bids show PNCs conservative stance ......................................................................................................................... 7
Cluster-based execution limits CAPEX outlay ................................................................................................................... 8
WC cycle improves, to stabilise further ............................................................................................................................ 9
Strong competitive positioning ...................................................................................................................................... 10
High earnings quality is the differentiator ......................................................................................................................... 11
Improving client advances to alleviate B/S stress ............................................................................................................. 11
Receivables/networth below industry averages ............................................................................................................... 11
Debtor days lower than industry average ......................................................................................................................... 12
Gross debt/equity lower than peer average ..................................................................................................................... 12
Asset turnover higher than industry averages .................................................................................................................. 13
EBITDA margins higher than peers .................................................................................................................................... 13
Positive OCF ....................................................................................................................................................................... 14
OCF/EBITDA conversion reflect on superior quality cash flow.......................................................................................... 14
Improving employee cost structure .................................................................................................................................. 15
Strong BOT Portfolio Value BOTs at Rs 130/sh (1.4x P/BV) ........................................................................................... 17
Key assumption & estimates Standalone ..................................................................................................................... 18
Key assumption & estimates Consolidated .................................................................................................................. 19
HDFC Sec Vs Consensus ................................................................................................................................................. 20
Outlook and Valuation................................................................................................................................................... 21
Key catalysts ................................................................................................................................................................. 23
Key risks to our BUY stance ............................................................................................................................................ 23
Annexure ...................................................................................................................................................................... 24
Financials ...................................................................................................................................................................... 26
Page | 2
NHAI Project Details

Awarded
Length
(till Feb 2016)
(Kms)
EPC
2,526
BOT
803
HAM
185
Total
3,514
Upcoming Projects
EPC
1,295
BOT
870
HAM
1,236
Total
3,400
Source: NHAI, Company, HDFC sec Inst Research
Project Cost
(Rs mn)
293,087
107,982
41,620
442,689
182,197
99,365
240,421
521,983
Trend in NHAI project awards

EPC (kms)
7,000
BOT(kms)
Hybrid Annuity (kms)
%EPC - RHS
120
Rs mn
6,000
100
5,000
80
4,000
60
3,000
40
2,000
20
1,000
FY18E
FY17E
FY16E
YTDFY16
FY15
FY14
FY13
FY12
FY11
FY10
FY09
FY08
FY07
FY06
FY05
(20)
FY04
FY03
The authority plans to

award 4,800km in FY16E, of
which it has already
achieved 2,819km
awarded contracts for 3,514km of roads (2,526km

under the EPC mode, 803km under BOT and
185km under HAM).
all under the BOT mode. However, project

awards declined significantly in FY13 and FY14,
plagued by the economic slowdown, subdued
infra spending, tight financing environment and
weak operating metrics for developers.
With a new government at the Centre, the project
awarding activity once again picked up pace in
FY15. Against a target of 5,000km, NHAI awarded
3,026km, of which 2,292km was under the EPC
mode.
To attract more private participation, NHAI
recently introduced the Hybrid Annuity Model
(HAM), which is a mix of EPC and BOT (annuity).
NHAI plans to award 4,800km in FY16E 2,900km
under EPC, 900km under BOT and 1,000km under
HAM. In YTDFY16, the authority has successfully
FY02
In order to attract private

participation, NHAI has
introduced the Hybrid
Annuity Model a mix of
EPC and BOT (annuity)
models
NHAI achieved its peak award of 6,491km in FY12
FY01
Project award activity

picked up in FY15 with NHAI
meeting 60% of its target,
driven majorly by the EPC
projects
Capitalising on robust roads order pipeline
FY00
NHAI achieved its peak

award of 6,491km in FY12,
but witnessed significant
decline during FY13 and
FY14 mainly because of
macro slowdown
Page | 3
We dont perceive PNCs

single-segment exposure in
roads to be a high risk. The
~60% of upcoming NHAI
bidding pipeline is in PNCfocused states
NHAI is yet to award

15,000km from the existing
highway programme and
will be adding another
50,000km in the pipeline
PNC-focused states are also

coming up with their own
state expressway plans,
which lend visibility to the
next 8-10 years of order
pipeline
Dedicated freight corridor is

another key focus area. PNC
is expected to bid for two
packages of Rs 16bn each in
the Eastern Dedicated
Freight Corridor
The existing qualification
can be extended to
irrigation, water and MRTS
segment through JVs, if
required
Huge opportunity in PNC-dominated states

PNC has a strong pre-qualification in the highways
segment with huge ordering potential. It is likely

to be the beneficiary of the NHAIs upcoming bid
pipeline, with ~60% of bids in PNC-dominated
states. With UP alone contributing 32.6%, the
other key states are Jharkhand, Bihar and
Rajasthan.
Apart from this, the UP Expressways Industrial
Development Authority (UPEIDA) has an order
pipeline of ~Rs 250bn, with the Lucknow-Ballia
Expressway having an ordering potential of Rs
150bn.
Although investor concerns about roads EPC
dominating PNCs revenue stream are valid, the
State-wise Distribution Of Upcoming NHAI Bids (%)
companys performance is on a par with other

large well-diversified EPC players.
At present, the roads segment is a low-hanging
fruit for the government, as initiatives like 90%
land availability, 10% interest-free advance and
setting up of arbitration tribunal have made the
sector more lucrative.
While roads remain the key focus area, PNC is also
qualified to bid for the dedicated freight corridor
(DFC). The company is currently bidding for two
packages of Eastern DFC worth Rs 16bn each.
There is large ordering potential in MRTS, water
and irrigation segment. PNC can use its
qualification in these segments with JVs.
State-wise Upcoming Project Bid Details
Statewise
West Bengal
3.8
Rajasthan
8.2
Bihar
9.0
Jharkhand
9.6
Himachal
Pradesh
7.3
Karnataka
9.7
Maharastra
12.3
Gujarat
7.4
Source : NHAI, Company, HDFC sec Inst Research
UP
32.6
Kms
Type Project Cost (Rs mn)
70
BOT (Toll)
10,055
Bihar
71 Hybrid Annuity
30,662
170
EPC
16,050
Jharkhand
151
BOT (Toll)
27,687
368
EPC
50,274
387 Hybrid Annuity
78,413
UP
145
BOT (Toll)
16,610
135
OMT
2,433
16
EPC
3,076
Gujarat
208 Hybrid Annuity
30,509
154
BOT (Toll)
20,918
Maharastra
9
EPC
6,134
196 Hybrid Annuity
28,536
Karnataka
347
EPC
44,030
87 Hybrid Annuity
25,880
Himachal
Pradesh
60
EPC
7,407
215
BOT (Toll)
21,661
Rajasthan
111
EPC
8,952
24 Hybrid Annuity
6,684
West Bengal
127
EPC
17,390
Source : NHAI, Company, HDFC sec Inst Research
Page | 4
PNCs cumulative NHAI EPC

project wins value has been
7.2% higher than the NHAIs
project cost estimates
Conservative bids provide margin comfort

We mapped YTDFY16 project bids (EPC) opened by
PNCs aggregate win value is 7.2% higher than the
This gives us comfort on

EBIDTA margins guidance of
13-13.5%
comparing our coverage universe, we found that

Sadbhav Engineering, despite bidding at 1.4%
below the NHAI cost on an aggregate basis, has
guided for 10-11% EBIDTA margins. Hence, PNC,
too, is expected to report higher than 10% EBIDTA
margins.
NHAI and aggregated the wins across key EPC

players in the roads segment. For the sector, the
awarded cost is 0.7% higher than the NHAIs
benchmark cost.
project cost. The company is at the top of the list
with the highest positive difference vs. the
benchmark. This gives us comfort on EBIDTA
margins guidance of 13-13.5%.
Additionally, PNC has location advantage in Uttar
The aggressive bidding by EPC players of late has

cast a shadow on the profitability to be earned on
the execution of the projects. However, on
Pradesh. Its recent NHAI wins are in close

geographical proximity, which provide scope for
further margins re-rating. Better asset utilisation,
availability of road aggregates and strong local
logistical support will drive cost savings.
Projects Awarded Under EPC In YTDFY16

Bidder
Sadbhav Engineering has bid

closer to the NHAI cost and
yet given road EPC projects
EBIDTA margins guidance of
10-11%. This provides
direction on PNC
comfortably achieving 1313.5% guidance, as its
cumulative award win value
is 7.2% above the NHAI
benchmark cost
PNC Infratech
G.R. Infraprojects
Dilip Buildcon - Ranjit Buildcon JV
Ashoka Buildcon
KNR Construction
Gayatri Projects
Jkumar Infra - JM Mhatre JV
Oriental Infra
Sadbhav Engg
JP Associates
L&T
M.G. Contractors Pvt. Ltd.
Varaha Infra
Total
EPC Work Cost (INR

mn)
28,159
16,870
5,707
14,233
15,583
39,653
16,294
6,645
24,870
7,885
24,390
2,392
2,731
205,412
Awarded Cost (INR mn)

30,190
18,071
5,970
14,809
16,061
39,930
16,337
6,589
24,525
7,470
22,450
2,122
2,293
206,817
% Bidding above/below
benchmark cost
7.2
7.1
4.6
4.0
3.1
0.7
0.3
(0.9)
(1.4)
(5.3)
(8.0)
(11.3)
(16.0)
0.7
Page | 5
NHAI has now eased the

project clearance process,
with 90% of the land being
acquired before issuing the
letter of award to the
contractor
In case of BOT projects, the

developer can exit two years
after receiving COD
NHAI has introduced onetime fund infusion to revive

unfinished BOT projects
where significant progress
has been made
Policy interventions to improve project awards and execution

With government initiatives making the roads
sector margins more attractive, bids have been
flowing in for the EPC segment. Earlier, the sector
was plagued by the right-of-way issue with land
availability being a major concern. This often led
to projects lying idle for a long time, with fixed
costs accruing and resulting in cost overruns.
NHAI has now eased the project clearance
process, with 90% of the land being acquired

before issuing the letter of award to the
contractor. In case of BOT projects, the developer
can exit two years after receiving COD. This will
provide much-needed relief to stressed
developers and also free up equity for new BOT
projects.
Premium rescheduling has also been allowed for

projects where developers are witnessing cash
flow shortfall in servicing debt.
After witnessing limited developer interest in BOT

projects over the past few years, NHAI recently
Policy Measures To Improve Executions
introduced the Hybrid Annuity Model (HAM) for

highways development. Unlike in the BOT model,
the government will fund 40% of the project cost
under HAM, resulting in limited equity funding
from the private developers.
Additionally, NHAI has introduced one-time fund
infusion to revive unfinished BOT projects where

significant progress has been made.
The NDA governments Union Budget 2016-17 has
given a fresh lease of life to PPPs. The government

plans to introduce the Public Utility (Resolution of
Disputes) Bill during FY17E. Also, guidelines for
renegotiation of PPP concession agreement are
expected to be issued, and a new credit rating
system for infrastructure projects will be
announced.
This, along with the Arbitration and Conciliation
Act Bill, 2015, and Commercial Courts Bill, 2015,

will help settle arbitration claims in 18-24 months
instead of over a decade at present.
Policy Decisions
Arbitration and Conciliation

Act Bill, 2015, and
Commercial Courts Bill,
2015, will help settle
arbitration claims in 18-24
months instead of over a
decade at present
Impact
Reduced financial risk for developers as govt. funds 40% of the project cost. Higher EPC order
Introduction of Hybrid Annuity Model
inflows. Toll collection risk lies with the govt. as developer earns annuity-based income
Amendments to Model Concession
Places onus on NHAI for timely execution. Regular reporting of projects improves execution and
Agreement (MCA)
reduces contractual disputes.
Premium payments can be rescheduled and deferred at "bank rate + 2%" to align with project
Allowing premium restructuring
cash flows
One-time fund infusion by NHAI in stuck project will ease funding-related issues and enable debt
Revival of stuck projects
servicing
Allowing developers to exit project two years after receiving COD will provide relief to stressed
Easing of exit norms
developers
Resolving ROW & land acquisition
To ease project clearance process and speed up execution. NHAI to only award land after
related issues
acquiring 80% for BOT & 90% for EPC projects
Page | 6
Hybrid Annuity Model: Next big driver of NHAI PPP projects

Salient Features Of The Model
Key Feature
PNC has been conservative

while bidding for the initial
rounds of Hybrid Annuity
projects in UP, with its
package-III bid being 46.8%
higher
Similarly, for the MeerutBulandshahr, PNC bid was

higher than project cost by
28.3%. It didnt bid for the
Delhi Meerut Package-I.
Project Name
Concession period of 15 years including construction period

Bidders will quote construction cost as the bid variable - called Bid Project Cost (BPC)
Bidding and concession period
Bidders to also quote O&M payments
Evaluation of bids on lifecycle cost basis considering NPV of both BPC and O&M bids
BPC to be indexed every month (70% of WPI and 30% of CPI)
40% of the BPC to be funded by NHAI
Payments linked to physical progress milestones (24%, 40%, 60%, 75%, 90%)
Payments during construction
10% mobilisation advance (interest bearing) to be adjusted against periodic billings
Early-completion bonus of 0.5%/month of 60% of BPC
40% of the BPC to be paid in bi-annual annuities over 15 years post-COD
Annuities to carry additional interest at 'bank rate +3%' on reducing balance basis
Payments during operations
Reimbursement for O&M expenses will be as per bids. Payments will be indexed
The annuity payments will be ballooning
Original consortium to hold minimum 51% during construction period and till two years post-COD
Exit norms
Exit allowed post completion of two years of COD
HAM bids show PNCs conservative stance
PNC has been conservative while bidding for the
initial rounds of Hybrid Annuity projects in UP,

with its package-III bid being 46.8% higher.
L1 - APCO/
Chetak JV
Bid Project Cost
10,576
O&M (Annual) (Rs mn)
171
NPV of Bid Project Cost (Rs mn)
8,855
10,237
22.27
L2 - Sadbhav
L3 - PNC
Infrastructure Infratech
12,060
15,030
243
162
10,097
12,584
Similarly, for the Meerut-Bulandshahr, PNC bid

was higher than project cost by 28.3%. It didnt bid
for the Delhi Meerut Package-I.
Delhi-Meerut Expressway
Package-I
6,636
8.72
L4 - Ashoka L1- Welspun L2 - Ashoka
Concessions Enterprise
Concessions
15,820
8,415
13,060
260
40
212
13,246
7,046
10,935
Delhi-Meerut Expressway Package-III
Project Cost (Rs mn)

Length (Kms)
Name of Bidder
Impact
4-laning of Meerut-Bulandshahr NH-334
L1 - APCO/
Chetak JV
8,690
58
7,730
6,804
61.20
L2 - PNC
L3 - Sadbhav L4 - Ashoka
Infratech Infrastructure Concessions
8,730
8,100
10,420
61
191
99
7,790
8,280
9,500
Page | 7
Cluster-based execution limits capex outlay

PNCs cluster-based execution strategy fuels its
are located in UP. To assert its dominance in the

northern region, the company has remained
focused on UP and the neighbouring states,
thereby ensuring a tight control on execution. This
strategy has resulted in high gross asset turnover
of 4.1x FY16E.
revenue and profitability growth. The company

consciously bids for projects in close proximity to
its quarries and crusher plants, which are spread
out within a 500-km radius of Delhi.
A majority of its projects, including all the BOTs,
Existing BOT Projects
BULANDSHAHR
MEERUT
DELHI
GHAZIABAD
Existing EPC Projects

Upcoming Hydrid Annuity Projects
ALMORA
Purvanchal Expressway (Lucknow to Ballia)
BAREILLY
ALIGARH
AGRA
SONAULI
BARABANKI
FIROZABAD LUCKNOW
BHIND
KANPUR
GWALIOR
JARWAL
GORAKHPUR
AYODHYA
SULTANPUR
RAE BARELI
KABRAI
BALLIA
KOLIWAR
JAUNPUR
BHOJPUR
VARANASI BUXAR
MANIHARI
Page | 8
WC cycle improves, to stabilise further

Inventory days reduced from
52 to 38 days during 9mFY16
vs FY15
Plagued by a prolonged slowdown in economic
activity, subdued infra spending, tight financing

environment and weak operating metrics, PNC
saw its debtor days rise to ~119 in FY12. With the
uptick in the execution cycle, 9mFY16 debtors
have reduced to 76 days and inventory to 38 vs.
52 days in FY15.
Despite this deterioration, we dont expect any

significant leverage build up in the balance sheet.
The FY16E net D/E is expected to be 0.03x, and
may increase to 0.1x during FY17E.
Given the strong revenue growth, PNC will

generate only marginally positive operating cash
flows on account of working capital expansion
over FY16-18E. Capex requirements will result in
negative FCF. We do not see this impacting the
balance sheet materially as the accretion to net
worth will keep D/E in check.
This has resulted in a cash conversion cycle of 144

Debtor days also improved
from 86 days to 76 during
9mFY16
days for 9mFY16 vs. 154 as of end FY15. With pickup in the EPC order book and less dependence on
captive orders, the working capital cycle may
marginally deteriorate to 157 days during FY16E.
Working Capital Cycle (Standalone)
Cash conversion cycle

improved from 154 days
end-FY15 to 144 days end9mFY16
Particulars (days)
FY10
FY11
FY12
FY13
FY14
FY15 9mFY16
FY16E
FY17E
FY18E
Inventory
20.8
47.3
42.5
29.4
33.2
52.0
38.2
45.0
45.0
45.0
Debtors
65.0
60.9
119.2
111.5
108.8
85.8
75.9
85.0
90.0
90.0
Other Current Assets
25.5
21.0
42.1
49.9
71.7
76.3
91.0
91.0
91.0
92.0
Payables
11.9
13.5
24.6
40.4
22.2
25.3
20.2
22.0
25.0
25.0
Other Curr Liabilities & Provisions
18.3
5.4
19.1
15.1
39.9
34.6
41.2
42.0
42.0
42.0
Net Working Capital Cycle
81.1
110.4
160.1
135.3
151.6
154.2
143.8
157.0
159.0
160.0
Source: Company, HDFC sec Inst Research
Owing to strong revenue

growth, the WC may expand
resulting in negative FCF.
This may not have a major
impact on balance sheet
deterioration, as net D/E
will still be ~0.1x end-FY17E
vs. 0.03x during FY16E
Free Cash Flow (FCF) Generation (Standalone)

Particulars (Rs mn)
EBITDA
NWC Changes
Cash Flow From Operations
Capex
Free Cash Flow (FCF)
Enterprise Value (EV)
FCF/EV (%)
FY10
923
(425)
274
(119)
155
17,376
0.9
FY11
1,288
(2,000)
(1,002)
(313)
(1,315)
20,371
(6.5)
FY12
1,535
(1,179)
(19)
(339)
(358)
22,073
(1.6)
FY13
1,607
729
2,004
(331)
1,673
21,898
7.6
FY14
1,418
514
1,653
(535)
1,118
21,492
5.2
FY15
2,166
(1,094)
632
(1,012)
(380)
23,063
(1.6)
FY16E
2,595
(1,593)
342
(800)
(458)
25,804
(1.8)
FY17E
3,014
(1,681)
575
(800)
(225)
26,412
(0.9)
FY18E
3,583
(2,027)
703
(850)
(147)
27,600
(0.5)
Page | 9
PNC has strong competitive

positioning in the sector
Strong competitive positioning

On competitive positioning of EPC players, PNC is
placed well with above average execution,

relatively strong cost structure, high asset turn,
average CFO/EBIDTA and low D/E ratio.
Competitive positioning will further strengthen
with reducing exposure to subsidiaries and ROE

expansion. Operating leverage on high execution
will lead to margin and earning recovery.
PNC Ahead Of EPC Peers On Competitive Positioning

Cost structure
Exposure to
Rec/NW
Asset Turnover
(x)
CFO
D/E
EBITDA
Margin (%)
Overall
Score
ITD Cementation
J Kumar
NCC
KNR Construction
Simplex Infra
Sadbhav Engineering
PNC Infra
Note:
Strong;
Relatively Strong;
Average;
Relatively Weak
Weak
Page | 10
High earnings quality is the differentiator

Improving client advances to alleviate B/S stress
Receivables/net worth below industry averages
PNCs advances from customers at ~14.1% of total
In the peer group, PNCs receivable as percentage
revenues in FY16E are higher compared to peer

average of 10.6%. This is on account of new order
inflows and a majority of the projects being in the
early execution stage. A higher share of interestfree customer advances will alleviate working
capital pressure. PNC is targeting Rs 104.5bn
worth of new order inflows between FY16 and
FY18E.
Client advances/revenue at
14.1% have remained higher
than peer average of 10.6%
of net worth is below the industry average,

demonstrating the quality of the order book and
financial discipline followed by the company. We
expect this to remain at current levels in the
future, as the impending pick-up in execution
cycle will be equally compensated by a
proportionate increase in receivables.
Advances From Customers As % Of Total Revenue

FY07
ITD Cementation
J Kumar
NCC
KNR Construction
Simplex
Sadbhav Engineering
PNC Infratech
Average
4.6
2.8
25.0
18.8
29.4
FY08
21.4
2.2
3.8
15.2
20.3
12.7
FY09
17.3
2.0
2.5
20.9
17.0
13.7
16.1
12.6
12.2
FY10
11.8
1.0
0.4
22.4
13.6
25.8
7.1
12.5
FY11
14.3
1.3
3.3
12.4
16.0
22.1
1.0
11.6
FY12
12.8
14.0
16.8
3.4
16.4
10.5
11.2
12.3
FY13
12.2
27.2
14.9
7.6
19.0
12.1
6.6
15.5
FY14
18.5
18.8
18.3
3.5
14.8
17.6
18.9
15.2
FY15
20.7
6.8
8.0
3.2
17.4
11.5
14.1
11.3
FY16E
15.1
6.8
8.0
4.9
17.1
11.5
14.1
10.6
FY10
1.35
0.22
0.58
0.62
1.85
0.71
0.69
0.89
FY11
1.60
0.27
0.61
0.39
2.13
0.70
0.46
0.95
FY12
0.99
0.20
0.54
0.23
2.62
0.90
0.84
0.91
FY13
0.91
0.23
0.46
0.27
3.03
0.95
0.70
0.97
FY14
0.98
0.23
0.53
0.23
2.92
0.81
0.55
0.95
FY15
0.78
0.25
0.43
0.31
3.25
0.56
0.51
0.93
FY16E
0.66
0.21
0.46
0.23
3.09
0.72
0.36
0.90
Source: Company *For ITDC FY16E should be read as CY15
Receivables/Net Worth (x)

Receivable/net worth is
lower than peer group at
0.4x. This implies high order
book quality and strong
collection discipline
FY07
ITD Cementation
J Kumar
NCC
KNR Construction
Simplex
Sadbhav Engineering
PNC Infratech
Average
0.06
0.56
0.64
3.08
0.58
FY08
0.83
0.12
0.55
0.26
1.53
0.47
FY09
1.40
0.25
0.61
0.49
1.85
0.45
0.98
0.63
0.84
Page | 11
PNCs receivable days have

improved from 86 in FY15 to
76 in 9mFY16. We expect it
to stabilise at 85-90 days
over the FY16-18E period
Debtor days lower than industry average
Gross debt/equity lower than peer average
PNCs debtor cycle is below the peer group
PNCs gross D/E at 0.1x is lower than its peersets
average. While we expect an increase, it will

remain comfortable at ~90 days by FY18E as pick
up in the execution cycle will be equally
compensated by a proportionate increase in
receivables. As of Dec-15, PNCs debtor days
reduced to 76 vs. 86 in FY15. The management
expects this to moderate to 85-90 days by endFY16E.
average of 0.8x. We expect this to remain at 0.1x

in FY18E primarily on account of ease in net
working capital cycle, higher operating cash flows
and lower capex requirement.
Receivables (Days Of Sales)

FY07
ITD Cementation
J Kumar
NCC
KNR Construction
Simplex
Sadbhav Engineering
PNC Infratech
Average
4
74
59
181
64
FY08
114
26
91
45
149
55
FY09
134
33
90
72
130
53
76
80
85
FY10
118
32
99
97
147
81
65
96
FY11
144
39
105
65
178
73
61
101
FY12
81
35
91
45
195
94
119
90
FY13
79
42
73
63
244
159
111
110
FY14
93
41
80
51
271
120
109
109
FY15
94
55
60
73
306
92
86
113
FY16E
40
69
70
68
289
110
85
108
FY10
1.41
0.18
0.68
0.36
1.34
1.08
0.49
0.84
FY11
1.51
0.44
1.04
0.21
1.54
0.64
0.25
0.90
FY12
1.71
0.39
0.93
0.14
1.78
0.59
0.55
0.92
FY13
1.96
0.47
0.90
0.16
2.09
0.92
0.45
1.08
FY14
1.88
0.97
0.98
0.18
2.10
1.07
0.44
1.20
FY15
1.35
0.65
0.62
0.17
2.24
0.81
0.49
0.97
FY16E
1.18
0.33
0.64
0.09
2.09
0.70
0.09
0.84
Gross D/E lower at 0.1x vs.

peer average of 0.8x. This is
expected to remain at
current levels
Gross Debt/Equity (x)

FY07
ITD Cementation
J Kumar
NCC
KNR Construction
Simplex
Sadbhav Engineering
PNC Infratech
Average
1.23
0.61
1.69
2.49
0.50
FY08
0.25
0.31
0.57
0.72
0.99
0.53
FY09
1.25
0.32
0.74
0.51
1.35
0.61
1.31
0.56
0.80
Page | 12
Asset turnover higher than industry averages
PNCs asset turnover is higher than the average for
its peers. We expect the asset turn to improve to

~4.3x by FY18E, mainly on account of increased
order visibility and consequent pick-up in PNCs
execution capability.
PNC owns a huge fleet of construction equipment

and mines from which aggregates are produced,
enabling it to assert a tight control on timeliness
and cost.
Asset Turnover Higher Vs. Peers

Asset turns higher vs. peers.
Expect pick-up on account of
increased order visibility and
execution capability
Asset Turnover (x)

ITD Cementation*
J Kumar
NCC
KNR Construction
Simplex
Sadbhav Engineering
PNC Infratech
Average
FY07
2.9
5.7
2.2
4.0
2.4
FY08
4.9
3.2
5.2
2.3
3.7
3.7
FY09
4.8
3.4
6.7
2.5
3.9
4.1
3.5
3.8
4.2
FY10
4.3
5.6
6.3
2.5
3.6
3.8
5.0
4.3
FY11
3.8
5.8
5.5
2.0
3.2
5.9
6.3
4.4
FY12
3.7
4.3
5.1
1.6
3.3
6.0
6.3
4.0
FY13
3.3
3.3
5.2
1.4
3.2
3.5
5.8
3.3
FY14
3.0
2.6
5.3
1.6
2.9
3.2
4.0
3.1
FY15
3.0
2.2
6.9
1.6
2.7
3.5
4.1
3.3
FY16E
5.1
2.2
6.4
1.4
2.6
3.8
4.2
3.6
EBITDA margins higher than peers
PNCs EBITDA margins are ~200bps higher

EBIDTA margins higher than
peers owing to self-owned
equipment and captive
quarries near its projects
1bn of early-completion bonus on some of its EPC

projects. Going forward, we expect margins to be
maintained in the 13-14% corridor.
compared to its peers. This is an outcome of

choosing quality orders and ahead-of-schedule
project completion. PNC is expecting nearly ~Rs
EBIDTA Margins (%)

FY07
ITD Cementation*
J Kumar
NCC
KNR Construction
Simplex
Sadbhav Engineering
PNC Infratech
Average
14.9
8.1
13.4
8.3
12.2
FY08
6.7
18.2
10.4
14.5
8.4
10.8
FY09
4.8
14.9
9.0
15.1
7.2
10.2
11.4
11.5
10.2
FY10
9.3
16.8
10.1
15.7
8.3
11.0
12.3
11.9
FY11
9.6
15.1
9.6
17.1
8.7
10.8
11.3
11.8
FY12
9.7
16.1
7.6
18.4
7.8
10.8
12.1
11.8
FY13
12.6
16.7
8.2
18.6
7.9
8.6
12.3
12.1
FY14
10.3
17.3
6.6
15.6
9.2
10.6
12.3
11.6
FY15
5.3
18.7
7.8
14.3
10.1
10.1
13.9
11.0
FY16E
6.2
18.0
8.7
16.0
10.2
10.8
13.4
11.7
Page | 13
Positive OCF
CFO is expected to remain
positive and improve from
FY17E
PNC has delivered positive cash flows from
We expect PNC to benefit from the upcoming
operations from FY13, which explains the low net

D/E ratio. Going ahead, we expect the cash flow
from operations to improve as profitability
increases and the company exercises a tighter
control on its working capital needs.
Hybrid Annuity opportunity, while competition in

the EPC segment will be huge. PNC will adopt a
stable approach while bidding for the EPC
segment so as to maintain its EBIDTA margins of
13-14%.
Operating Cash Flow

CFO (Rs mn)
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16E
(2,449)
468
1,222
571
151
1,869
436
4,651
178
(70)
142
(10)
(280)
1,180
998
(252)
586
1,262
1,645
(492)
(1,488)
239
(2,514)
9,764
3,685
3,699
5,139
5,204
327
439
1,164
340
818
1,126
10
1,332
671
2,668
(140)
587
603
1,107
114
341
(1,333)
1,986
686
7,956
278
(283)
430
863
(373)
1,051
658
4,623
(365)
2,007
274
(1,002)
(19)
1,793
1,653
632
342
402
93
(406)
428
(128)
2,597
702
1,727
1,504
4,348
ITD Cementation
J Kumar
NCC
KNR Construction
Simplex
Sadbhav Engineering
PNC Infratech
Average
Source : Company *For ITDC FY16E should be read as CY15
OCF/EBIDTA conversion reflect on superior quality of cash flow
Barring FY11-12, the OCF/EBIDTA ratio for the

OCF/EBIDTA conversion
deteriorated in FY15-16E
after strong FY13-14 owing
to revenue growth pick-up.
The trend will improve from
FY17E
company has been positive. With a currently debtfree balance sheet, PNC has sufficient scope to
fund future growth.
After strong FY13-14 CFO/EBIDTA, the quality of

cash flows deteriorated during FY16E on account
of high working capital investment. This is
expected to improve from FY17E.
OCF/EBIDTA Depicts High Cash-Flow Quality

OCF/EBIDTA %
ITD Cementation
J Kumar
NCC
KNR Construction
Simplex
Sadbhav Engineering
PNC Infratech
Average
FY07
FY08
106.0
70.4
93.2
(9.9)
47.0
(17.9)
(13.7)
63.1
24.8
(29.3)
FY09
(384)
23.5
(39.8)
118.9
18.1
39.7
61.3
5.4
(37.2)
FY10
34
(0.8)
4.9
30.3
30.0
62.7
29.7
26.8
FY11
87
(19.5)
(51.8)
60.3
2.8
(15.7)
(77.8)
10.5
FY12
34
78.7
244.5
80.8
7.4
36.2
(1.2)
80.3
FY13
7
59.6
78.3
0.8
(28.5)
42.3
111.5
26.6
FY14
115
(12.3)
91.4
101.9
38.3
185.7
116.5
86.7
FY15
48
23.4
79.1
53.2
12.2
(12.2)
29.2
33.9
FY16E
243
50.1
74.1
193.9
133.5
52.6
13.2
124.5
Source : Company *For ITDC FY16E should be read as CY15
Page | 14
Improving employee cost structure
company (roads), with limited skill requirements,

the cost structure has remained low over an
extended period.
PNCs employee expense is below its peer

average. Since PNC is virtually a single vertical
Employee Expenses % Revenue

FY07
ITD Cementation
J Kumar
NCC
KNR Construction
Simplex
Sadbhav Engineering
PNC Infratech
Average
1.2
2.6
1.5
2.0
2.1
FY08
8.8
1.8
3.6
1.6
1.8
1.6
FY09
8.4
2.2
4.2
2.2
1.7
1.5
1.9
3.2
3.4
FY10
8.6
2.1
3.5
2.3
1.9
1.5
2.8
3.3
FY11
10.1
2.4
4.8
2.2
8.1
1.5
2.8
4.9
FY12
10.1
3.0
4.6
3.6
7.7
1.5
3.3
5.1
FY13
11.3
4.7
4.2
4.2
8.4
2.4
3.6
5.9
FY14
12.1
6.5
3.9
4.2
8.4
2.6
5.0
6.3
FY15
11.3
5.5
3.2
4.3
8.6
3.3
4.7
6.0
FY16E
7.2
5.6
3.7
5.0
8.6
3.3
4.6
5.6
Page | 15
EBITDA And PAT Margins (%)
Revenues (Rs mn)
EBITDA Margins (%)
Net Debt And Net D/E
Cash Flow From Operations & NWC Cycle
FY18E
FY17E
FY16E
FY15
FY14
FY13
FY12
FY11
500
1,500
140
120
1,000
100
500
80
60
-500
40
-1,000
20
-1,500
FY17E
1,000
160
FY16E
1,500
180
2,000
FY15
2,000
Rs mn
FY14
2,500
NWC Cycle - RHS
Rs mn
FY13
3,000
2,500
FY12
0.50
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
-
3,500
FY10
Cash flow from operations - LHS
Net D/E Ratio (x) - RHS
FY18E
FY18E
FY17E
FY16E
2.0
Net Debt (Rs mn)
Expect FY18E net working

capital cycle of 160 days and
cash flow from operations to
improve to Rs 703mn
FY15
FY14
FY13
FY12
FY11
Expect FY18E net debt of Rs

2.1bn and net D/E ratio of
0.1x
FY10
5,000
4.0
FY17E
6.0
FY18E
25,000
8.0
FY16E
10.0
FY14
45,000
12.0
FY11
EBITDA and PAT margins to

remain at 13-13.5% and 66.5%, respectively, over
FY16-18E
Rs mn
FY13
65,000
PAT Margins (%) - RHS
14.0
FY12
Rs mn
16.0
FY11
Book-to-bill ratio (x) - RHS
FY10
Order book (Rs mn)
FY15
Order Book, Revenues, Book-to-bill Ratio
FY10
Expect order book to grow

1.6x and revenue CAGR of
17.8% over FY16-18E
Page | 16
PNC has guided for Rs 3.53.7bn toll collections for

FY16E. We have estimated
the same at Rs 3.6bn.
Aligarh-Ghaziabad project
collection has been sharply
lower (Rs 4mn) vs. estimates
(Rs 9mn). Post-overloading
charge collection and
achievement of full COD, toll
collection may improve to Rs
6.5mn/day
There is no pending equity

to be invested in the
projects. Total equity
invested is Rs 4.6bn (PNC
share)
PNC has monetised 8.5%
stake in Jaora Nayagaon for
a consideration of Rs
341.5mn. PNC expect to
record Rs 97.3mn PBT during
4QFY16E
PNCs total asset portfolio is

valued at Rs 130/sh
Strong BOT portfolio Value BOTs at Rs 130/sh (1.4x P/BV)

PNCs 9mFY16 BOT toll collections grew 30% YoY
in the Gwalior-Bhind project and 16% YoY in the

Kanpur-Ayodhya OMT project. PNC has guided for
FY16E toll revenue of Rs 3.5-3.7bn vs. our estimate
of Rs 3.6bn.
The Aligarh-Ghaziabad project has been a pain
point in PNCs BOT portfolio. Against Rs 9mn/day

of tolling estimate, the actual 3QFY16 collection
stood at Rs 4mn/day. The shortfall in the
collections is expected to contract post the
installation of the Weigh Bridge. Overloading
charges collection can add about Rs 1mn/day in
collections.
Further, full COD (currently tolling is for
103/126km) is expected by May-16E, which may

add another Rs 1.5mn/day in collection. This will
take total collection/day to Rs 6-6.5mn/day. The
PNC JV is also trying to take this project under the
Project
Bareilly-Almora-Bagheshwar
Kanpur-Kabrai
Gwalior Bhind
Aligarh-Ghaziabad
Raibareli - Jaunpur
Narela Industrial Estate
Kanpur-Ayodhya
Total
PNC Stake
(%)
WACC (%)
100.0
100.0
100.0
35.0
100.0
100.0
100.0
13.5
13.5
13.5
13.5
13.5
13.5
13.5
5:25 scheme to align the project cash flows. Breakeven interest cost is Rs 5mn/day collections.
Raebareli-Jaunpur Annuity: PNC received COD for
the Raebareli-Jaunpur BOT project in March 2016.

The project achieved COD three months ahead of
the June-16E deadline. The management expects
to receive three-month partial semi-annuity of Rs
320mn as bonus by Dec-16E.
Bareli-Almora: Tolling started during 3QFY16 with
Rs 1mn/day collections vs. Rs 1.4mn/day

estimates. PNC expects to charge overloading and
traffic leakage by Apr-16E. This may result in
collections reaching Rs 1.4mn/day.
PNCs other BOT (Kanpur-Kabrai, Kanpur-Ayodhya

and Gwalior-Bhind) collections are higher than
estimates. We have valued PNCs BOT portfolio at
Rs 130/share using DCF methodolgy.
PNC Equity
Invested
(INR mn)
750
675
780
679
1,395
350
4,629
Project
Value (Rs
mn)
1,038
1,667
964
1,645
646
789
968
7,717
NPV (PNC
Share) INR
mn
1,038
1,667
964
576
646
789
968
6,648
Per share
Implied P/B
value
(x)
(Rs/sh)
20
1.4
32
2.5
19
1.2
11
0.8
13
0.5
15
2.3
19
130
1.4
Page | 17
We expect 26.4% FY16-18E

order backlog CAGR
Key Assumptions And Estimates (Standalone)

(Rs mn)
FY15
FY16E
FY17E
34,448
43,755
55,114
23.2
27.0
26.0
New order booking

Book to bill ratio
18,490
2.7
28,682
2.5
34,051
2.6
Total Revenue
15,610
19,375
22,692
35.5
2,166
13.9
364
24.1
2,595
13.4
525
17.1
3,014
13.3
550
462
319
376
1,429
9.2
474.8
33.2
954
6.1
4.7
1,845
9.5
660.6
35.8
1,184
6.1
4.6
2,183
9.6
757.9
34.7
1,425
6.3
4.5
86
85
90
632
342
575
CFI - b
(1,648)
(1,450)
(850)
FCF - a+b
CFF - c
Total change in cash a+b+c
(1,016)
229
(1,108)
1,734
(275)
1,066
(788)
626
791
Closing order book

Order book growth (%)
FY16-18E revenue CAGR

17.8%, EBIDTA CAGR 17.5%
FY16-18E net profit to

multiply 1.4x
Growth (%)
EBIDTA
EBIDTA margin (%)
Depreciation
Financial Charges
PBT
PBT margin (%)
Tax
Tax rate (%)
APAT
Net margin (%)
Gross Block Turnover
Debtor days
CFO - a
Net cash position doesnt

change debt materially
FY18E Comments
We expect 26.4% FY16-18E order backlog CAGR on account of
69,938
strong NHAI and state EPC roads pipeline
Strong growth during FY16E as PNC has secured new orders
26.9
worth Rs 28bn
41,718
2.8 Book-to-bill ratio to improve on new order wins
Strong order book accretion to result in FY17-18E with revenue
26,893
CAGR of 17.8%
18.5
3,583 FY15-18E EBIDTA CAGR of 17.5%
13.3 Margins to remain in 13-13.5% range
699
Borrowing cost to grow in line with revenue at 17.6% FY16-18E
441
CAGR
2,549 FY15-18E PBT CAGR of 17.5%
9.5 PBT margins to remain stable
853.1
33.5
1,696 FY16-18E PAT CAGR of 19.7%
6.3 Net margins to remain stable
4.6 Improvement on account of new orders inflow
May marginally deteriorate on account of delay in payments for
90
UP Expressway project
Higher revenue growth, robust client advance to result in higher
703
positive cash flow from operations
We have assumed PNC to take one hybrid annuity project of Rs
(1,500) 10bn in 1HCY16E. Total outgo on equity will be Rs 1.2bn
cumulative can be met by internal accruals
(797)
509
(288) Net cash position doesnt change debt materially
Source : HDFC sec Inst Research
Page | 18
FY16-18E revenue CAGR of

19.8%
This will be driven by toll

revenue CAGR of 30% and
EPC revenue CAGR of 17.8%
FY16-18E EBIDTA CAGR of

32.2% largely driven by toll
EBIDTA CAGR of 56.7% and
EPC EBIDTA CAGR of 17.5%
With most of the BOT

projects turning profitable
from FY18E, FY16-18E net
profit is expected to multiply
2.2x
Key assumptions and estimates (Consolidated)

(Rs mn)
FY15
FY16E
FY17E
Toll revenue
2,394
3,662
5,556
Construction revenue
16,215
19,375
22,692
Total Revenue
Growth (%)
EBIDTA (Toll)
EBIDTA (Construction)
EBIDTA margin Toll (%)
EBIDTA margin Construction
(%)
Total EBIDTA
EBIDTA margin
Depreciation
Financial Charges
PBT
PBT margin (%)
Tax
Tax rate (%)
Minority/Profit from Asso.
PAT
Net margin (%)
18,609
36.8
633
2,166
26.4
23,037
23.8
1,353
2,595
36.9
28,249
22.6
2,940
3,014
52.9
13.4
13.4
13.3
2,799.0
15.0
603
925
1,392
7.5
479
34.4
0.0
913
4.9
3,948.4
17.1
1,178
1,170
1,737
7.5
684
39.4
(222.3)
830
3.6
Gross Block Turnover
2.2
1.2
Debtor days
52
60
2,468
1,740
CFI - b
(9,749)
(5,084)
FCF - a+b
CFF - c
Total change in cash - a+b+c
Source : HDFC sec Inst Research
(7,281)
6,536
(745)
(3,343)
3,814
471
CFO - a
Net cash position to remain

strong
FY18E Comments
Toll revenue excludes Aligarh-Ghaziabad. Full year revenue impact of
6,186 toll and annuity projects to reflect from FY17E, with all the projects
being operational. FY16-18E CAGR of 30%
Expect execution to materially pick up during FY16-18E with revenue
26,893
CAGR of 17.8%
33,079 Overall FY16-18E revenue CAGR of 19.8%
17.1
3,322 FY16-18E Toll EBIDTA CAGR of 56.7%
3,583 FY16-18E EBIDTA CAGR of 17.5%
53.7 BOT margins to improve as toll projects have close to 90% margins
13.3
5,954.3 6,904.4 Overall FY16-18E EBIDTA CAGR of 32.2%

21.1
20.9 Improvement owing to higher toll revenue
1,738 2,053 Growth in line with BOT assets capitalisation
2,261 2,277 Interest expense largely driven by BOT projects
2,090 2,718 FY15-18E PBT CAGR of 25.1%
7.4
8.2 Expansion owing to faster toll revenue growth
811
930
38.8
34.2
(22.8)
45.4
1,256 1,834 FY16-18E PAT CAGR of 48.6%
4.4
5.5
Impacted by BOT project capitalisation. Since these are concession
1.0
1.1 projects, the asset turn is low as revenue is realised over life of the
project
75
75 Stable debtor days
Higher revenue growth and full impact of high-margin BOTs to result
3,029 4,786
in higher positive cash flow from operations
No incremental BOT project requirement. Capex to be largely
(800) (850)
standalone business driven
2,229 3,936
(1,501) (2,285)
728 1,650 Net cash position to remain strong
Page | 19
Consensus not fully

factoring in the impact of
back-ended order wins and
resultant miss in 20-25%
revenue growth guidance
Full impact of increased

working capital utilisation
and higher interest expense
not factored in by consensus
HDFC sec vs. Consensus

On standalone basis, our estimates are lower vs.
consensus as back-ended orders may result in subconsensus earnings growth.
Further, higher utilisation of working capital
(3QFY16-end standalone debt of Rs 450mn is

expected to touch Rs 3bn during FY17E) limits will
result in increased interest outlay. Lower-thanconsensus topline growth and higher interest
outgo will result in our FY18E net profit estimate
being lower by 13.9%.
Our FY17E and FY18E consolidated revenue
estimates are sub-consensus, as we model for

lower EPC execution. EBIDTA is higher than
estimates as we factor in better toll collection and
strong portfolio traffic growth.
High EBIDTA margin in BOT portfolio will result in

higher-than-consensus EBIDTA and PAT estimate.
Our EBIDTA margin estimate is about ~110bps
higher than consensus.
HDFC sec Vs Consensus

Standalone
This results in our

standalone FY18E net profit
estimate being 13.9% lower
vs. consensus
Sales (Rs mn)
EBIDTA (Rs mn)
Net Profit (Rs mn)
FY16E
FY17E
FY18E
FY16E
FY17E
FY18E
FY16E
FY17E
FY18E
Consensus
HDFC Sec
% Divergence
19,512
23,532
27,905
2,603
3,101
3,721
1,276
1,614
1,970
19,375
22,692
26,893
2,595
3,014
3,583
1,184
1,425
1,696
(0.7)
(3.6)
(3.6)
(0.3)
(2.8)
(3.7)
(7.2)
(11.7)
(13.9)
Consensus
23,449
29,272
34,140
4,005
5,884
6,707
702
1,119
1,695
HDFC Sec
23,037
28,249
33,079
3,948
5,954
6,904
830
1,256
1,834
% Divergence
(1.8)
(3.5)
(3.1)
(1.4)
1.2
2.9
18.3
12.2
8.2
Source: HDFC sec Inst Research
Our consolidated net profit

estimate is higher than
consensus by 8-12% on
account of better toll
collection and improvement
in blended EBIDTA margins
and PAT
Consolidated
Sales (Rs mn)
EBIDTA (Rs mn)
Net Profit (Rs mn)
FY16E
FY17E
FY18E
FY16E
FY17E
FY18E
FY16E
FY17E
FY18E
Page | 20
Outlook And Valuation

We value standalone EPC
business at Rs 496/sh (15x
one-year forward
Mar-18E EPS)
We value PNCs BOT
portfolio at Rs 130/sh (1.4x
invested equity)
Our target standalone P/E

multiple is in line with road
EPC peers, such as KNR
Construction and J Kumar
Infra
Target Price of Rs 625/sh implies ~26.1% upside
We have valued PNC standalone on P/E basis, in
line with its road EPC peers, namely KNR/J

Kumar/Sadbhav, at 15x one-year forward. Our
rationale is (1) Robust order book with ~1.6x
increase over the FY16-18E period to Rs 69.9bn,
(2) Strong balance sheet (9mFY16 standalone net
D/E at -0.01x, (3) Fully invested BOT portfolio, (4)
19.7% FY16-18E EPS CAGR and (5) High share of
NHAI EPC roads in the order book will result in
lower working capital demand, as these projects
have 10% interest-free client advance. PNC has 76
days of debtor, one of the best in the industry.
While the NHAI pipeline remains strong (about Rs
900bn annually) PNCs home state Uttar Pradesh

is coming up with Rs 250bn of road projects to be
awarded over the next 2 years. A strong set up in
UP will ensure strong order intake for the
company.
We have valued PNCs toll projects using 13.5%
discount rate for arriving at NPV of the projects.

We value the BOT business at Rs 130/sh (1.4x of
PNC invested equity). We remain cautious on the
traffic pick-up in the Aligarh-Ghaziabad BOT
project, as current collections are about 50%
lower than estimate. Even with overloading and
full COD, the collections may remain ~30% below
estimates.
Higher-than-estimated order intake may result in
further stock re-rating as PNC has (1) Diversified

presence in roads and dedicated freight corridor;
the biggest beneficiary of government spending,
(2) Strong execution capability raises hopes of
earning early-completion bonus (3-6% of project
cost) leading to EBIDTA margin expansion, and (3)
Likely support from captive order book in lieu of
any contraction in future EPC orders.
We rate PNC as a BUY with SOTP of Rs 625/sh.

We value the (1) Standalone EPC business at Rs
496/share (15x one-year forward Mar-18 EPS)
and (2) PNC BOT projects at Rs 130/sh.
SOTP Valuation
We rate PNC as BUY with
SOTP-based target price of
Rs 625/sh
Segment
Standalone construction - EPC
BOT Value
SOTP Value
Valuation
FY18 Adjusted PAT
Methodology
FY18 P/E
1,696
FCFE Mar-17
Multiple
15
Valuation (INR
mn)
25,439
6,648
32,087
Value per Share

(INR)
496
130
625
Page | 21
Peer Valuations
Relative Valuation
Ashoka Buildcon
KNR Constructions
J Kumar Infraprojects
NCC
Sadbhav Engineering
ITD Cementation
PNC Infratech
Average
EV/EBITDA (x)
FY16E
FY17E
9.2
9.2
9.9
7.6
7.7
7.4
8.6
7.7
15.4
13.3
10.8
8.0
9.9
8.8
10.3
8.9
FY18E
9.0
6.1
5.8
6.7
10.0
5.6
7.7
7.2
FY16E
25.0
18.9
21.4
21.4
31.8
33.6
21.5
25.3
P/E (x)
FY17E
34.2
13.0
17.0
18.1
24.3
17.3
17.9
20.7
FY18E
27.2
10.7
10.9
14.9
16.4
11.4
15.0
15.2
FY16E
1.6
2.1
1.7
1.2
3.3
3.2
2.0
2.2
P/BV (x)
FY17E
1.6
1.8
1.6
1.1
2.9
2.7
1.8
2.0
FY18E
1.5
1.6
1.4
1.1
2.5
2.2
1.6
1.7
Source: HDFC sec Inst Research for ITD Cementation, FY16E implies CY15
Page | 22
Key catalysts
Key risks to our BUY stance
Early-completion bonus may ease pressure on
Banks reluctant to increase non-fund-based
B/S, support growth: PNC expects to complete

the Agra-Lucknow Expressway by Dec-16E,
thereby making it eligible for the 6% (Rs 960mn)
early-completion bonus. Further, PNC received
COD for Raebareli-Jaunpur BOT project on March
8 three months ahead of June-16E deadline.
The management expects to receive partial semiannuity of Rs 320mn by Dec-16E.
Strong order pipeline: In terms of the order
pipeline, PNC will be the key beneficiary of NHAIs

annual roads ordering of 5,000-6,000km over
FY17-18E (excludes MoRTH order of 3,0004,000km). Of the 3,400km (Rs 520bn) of roads
coming up for bidding over the next 3-6 months,
nearly half are in PNC-dominated states. Uttar
Pradesh will award up to 1,000km, translating into
an opportunity size of Rs 150bn for PNC.
Additionally, the Lucknow-Ballia Expressway, with
total project cost Rs 140bn, is also a lucrative
prospect for the company. This will make new
order wins of Rs 45bn an achievable task.
Although we have modeled FY17E new order
intake at Rs 34bn, there is a high probability of
PNC exceeding our estimate.
limits: PNCs new order wins are contingent on

banks providing non-fund-based limits, which can
be as high as 10-20% of the order size. PNC, until
now, has not defaulted on payments and enjoys
sufficient fund lines. Any deterioration in the
balance sheet may impact funds tie-ups. PNC has
Rs 17bn of non-fund-based limits, of which it is
currently utilising Rs 11bn. This provides sufficient
comfort on order bookings.
Localised presence in UP: PNC has ~65-70% of the
order book exposed to UP and the rest in Bihar.

These two states are seeing strong order traction
owing to Central and state high political stakes.
Both states have weak infrastructure, but
contribute ~22% of Lok Sabha seats. Being
politically crucial and with UP going to polls in
2017, both states are investing heavily in building
infrastructure. Being financially deficit, these
projects face cash-flow crunch or delays. This may
impact PNCs execution negatively. The Central
governments support is crucial to take up
infrastructure projects in UP and Bihar.
Page | 23
ANNEXURE
Upcoming Projects in Northern States of India
NHAI projects to be awarded in FY16
Last Date of
Bid
Submission
Dec-15
Dec-15
Dec-15
Dec-15
Dec-15
Dec-15
Dec-15
Project Details
Type of Project
Length
(Kms)
Delhi - Meerut Expressway - Package I

Delhi - Meerut Expressway - Package II
Delhi - Meerut Expressway - Package III
4 laning of Meerut - Bulandshahr NH- 334
4 laning of Varanasi Gorakhpur,Package-II
4 laning of Varanasi Gorakhpur,Package-III
4 laning of Varanasi Gorakhpur,Package-IV
Hybrid Annuity
Hybrid Annuity
Hybrid Annuity
Hybrid Annuity
EPC
EPC
EPC
8.7
19.3
22.3
61.2
72.2
65.6
60.0
Project
Cost
(Rs mn)
6,636
13,765
10,237
6,804
8,566
10,382
8,523
Dec-15
4 Laning of Solan Kaithalighat Section of NH-22
Hybrid Annuity
22.9
5,221
Dec-15
Upgradation of Kullu-Manali Section NH-21
EPC
37.3
2,186
Dec-15
Dec-15
Dec-15
BOT
BOT
EPC
69.6
152.0
71.6
10,055
27,687
8,233
Hybrid Annuity
53.3
8,099
UP/Uttarakhand
Jan-16
Jan-16
Jan-16
6 Laning of Aurangabad to Bihar - Jharkhand Border NH-2

6 Laning of Bihar- Jharkhand Border Section NH-2
4 Laning of Mahulia-Baharagora- Section of NH-33
4 laning of Chutmalpur-Ganeshpur and Roorkee to
Gagalheri
4 laning of Gagalheri to Yamunanagar
4 laning of Rampur-Kathgodam
Construction of Sahibganj - Manihari Bypass
Delhi/UP
Delhi/UP
Delhi/UP
Uttar Pradesh
Uttar Pradesh
Uttar Pradesh
Uttar Pradesh
Himachal
Pradesh
Himachal
Pradesh
Bihar
Jharkhand
Jharkhand
Hybrid Annuity
Hybrid Annuity
Hybrid Annuity
51.5
43.4
21.9
10,094
6,159
19,056
Jan-16
4 Laning of Takoli Kullu section of NH-21
Hybrid Annuity
28.7
4,049
Jan-16
4 laning of Ner Chowk Pandoh Bypass section of NH 21
Hybrid Annuity
31.3
9,593
Jan-16
Jan-16
Jan-16
Jan-16
Jan-16
4 laning of Haridwar-Nagina
4 laning of Nagina-Kashipur
6 laning of Chakeri Allahabad
O&M of Jhansi-Orai
4 laning of Rampur-Kathgodam NH-87
6 Laning of Bihar- Jharkhand Border (Chordaha) to Barwa
Adda NH-2
EPC
EPC
BOT
OMT
Hybrid Annuity
71.6
98.8
145.0
135.4
49.8
9,895
12,908
16,610
2,433
5,714
Uttar Pradesh
Uttar Pradesh
Bihar/Jharkhand
Himachal
Pradesh
Himachal
Pradesh
UP/Uttarakhand
UP/Uttarakhand
Uttar Pradesh
Uttar Pradesh
Uttarakhand
BOT
150.8
27,687
Jharkhand
Jan-16
Jan-16
State
Page | 24

Last Date of
Bid
Submission
Feb-16
Feb-16
Feb-16
Feb-16
Feb-16
Feb-16
Feb-16
Mar-16
Mar-16
Mar-16
Mar-16
Mar-16
Project Details
Type of Project
Length
(Kms)
4 laning of Lucknow Sultanpur

4laning of NH-131A Narenpur to Purnea (Package-II).
Construction of Flyover/Underpass at IFFCO Chowk on
Delhi Gurgoan access controlled highway NH-8.
Construction of Flyover/Underpass at Signature Tower
Delhi Gurgaon Access Controlled Highway on NH-8.
Construction of Flyover/Underpass at Rajiv Chowk on Delhi
Gurgaon Access Controlled Highway on NH-8.
6 Laning of Chakeri Allahabad
4 Laning of Varanasi Gorakhpur,Package-III
4 Laning of Barhi-Hazaribagh NH-33
Hybrid Annuity
Hybrid Annuity
127.4
49.0
Project
Cost
(Rs mn)
16,619
11,607
EPC
2,851
Haryana
EPC
2,150
Haryana
EPC
2,343
Haryana
145.0
60.0
41.3
16,610
8,523
3,237
27.5
12,238
UP
UP
Jharkhand
Himachal
Pradesh
17.0
3,702
Punjab
13.0
8,677
Punjab
BOT
EPC
EPC
Hybrid
2 Laning with formation for 4 lane of Shimla Bypass NH 22
Annuity
Hybrid
4-lane Laddowal Bypass Linking NH-95 with NH-1
Annuity
4 Lane Elevated Highway between Samrala Chowk to
Hybrid
Ludhiana Municipal Limit of NH-95
Annuity
2/4 Laning of Govindpur (Rajgunj)- Chas-NH-32
EPC
56.9
1,989
State
Uttar Pradesh
Bihar
4,580 Jharkhand
320,052
Page | 25
Income Statement (Standalone)

Year ending March (Rs mn)
Net Revenues
Growth (%)
Material Expenses
Employee Expenses
Other Operating Expenses
EBITDA
EBITDA Margin (%)
EBITDA Growth (%)
Depreciation
EBIT
Other Income (Including EO
Items)
Interest
PBT
Tax (Incl Deferred)
RPAT
EO (Loss) / Profit (Net Of Tax)
APAT
APAT Growth (%)
Adjusted EPS (Rs)
EPS Growth (%)
Balance Sheet (Standalone)

FY14
11,521
(11.6)
3,814
577
5,712
1,418
12.3
(11.7)
248
1,170
FY15
15,610
35.5
5,717
737
6,990
2,166
13.9
52.7
364
1,803
FY16E
19,375
24.1
6,781
892
9,106
2,595
13.4
19.8
525
2,070
FY17E
22,692
17.1
8,010
1,071
10,597
3,014
13.3
16.1
550
2,464
FY18E
26,893
18.5
9,493
1,231
12,586
3,583
13.3
18.9
699
2,883
106
138
136
135
143
234
1,042
341
701
44
657
(14.9)
16.51
(14.9)
462
1,478
475
1,004
49
954
45.3
23.98
45.3
319
1,888
661
1,227
43
1,184
24.1
23.08
(3.7)
376
2,223
758
1,465
39
1,425
20.4
27.78
20.4
441
2,585
853
1,732
36
1,696
19.0
33.05
19.0

SOURCES OF FUNDS
Share Capital - Equity
Reserves
Total Shareholders Funds
Long Term Debt
Short Term Debt
Total Debt
Net Deferred Taxes
Long Term Provisions & Others
TOTAL SOURCES OF FUNDS
APPLICATION OF FUNDS
Net Block
CWIP
Investments
Total Non-current Assets
Inventories
Debtors
Cash & Equivalents
Total Current Assets
Creditors
Other Current Liabilities & Provns
Total Current Liabilities
Net Current Assets
TOTAL APPLICATION OF FUNDS
FY14
FY15
FY16E
FY17E
FY18E
398
5,892
6,290
553
2,193
2,747
27
1,775
10,839
398
6,786
7,184
528
3,003
3,530
4
2,499
13,218
513
12,153
12,666
390
803
1,193
4
2,641
16,503
513
13,525
14,038
390
2,203
2,593
4
2,511
19,145
513
15,164
15,677
390
3,103
3,493
4
2,387
21,561
1,528
16
3,510
5,054
1,048
3,436
2,262
999
7,745
700
1,261
1,960
5,785
10,839
2,105
70
4,235
6,410
2,225
3,667
3,263
212
9,367
1,081
1,478
2,559
6,808
13,218
2,378
70
4,885
7,333
2,389
4,512
4,829
838
12,567
1,168
2,229
3,397
9,170
16,503
2,628
70
4,935
7,633
2,798
5,595
5,655
1,629
15,677
1,554
2,611
4,165
11,512
19,145
2,779
70
5,585
8,434
3,316
6,631
6,776
1,341
18,064
1,842
3,095
4,937
13,127
21,561
Page | 26
Cash Flow (Standalone)

Reported PBT
Non-operating & EO items
Interest expenses
Depreciation
Working Capital Change
Tax Paid
OPERATING CASH FLOW ( a )
Capex
Free cash flow (FCF)
Investments
INVESTING CASH FLOW ( b )
Debt Issuance/(Repaid)
Interest Expenses
FCFE
Share Capital Issuance
Dividend
FINANCING CASH FLOW ( c )
NET CASH FLOW (a+b+c)
Closing Cash & Equivalents
Key Ratios (Standalone)

FY14
FY15 FY16E
1,042
1,478
1,888
8
9
172
373
183
248
364
525
514 (1,094) (1,593)
(331)
(498)
(661)
1,653
632
342
(535) (1,012)
(800)
1,118
(380)
(458)
(478)
(636)
(650)
(1,013) (1,648) (1,450)
211
784 (2,338)
(234)
(462)
(183)
1,095
(58) (2,978)
4,347
(93)
(93)
(23)
229
1,734
617
(788)
626
999
212
838
FY17E
2,223
241
550
(1,681)
(758)
575
(800)
(225)
(50)
(850)
1,400
(241)
934
0
(93)
1,066
791
1,629
FY18E
2,585
298
699
(2,027)
(853)
703
(850)
(147)
(650)
(1,500)
900
(298)
455
0
(93)
509
(288)
1,341
Year ending March

PROFITABILITY (%)
GPM
EBITDA Margin
APAT Margin
RoE
RoIC (or Core RoCE)
RoCE
EFFICIENCY
Tax Rate (%)
Fixed Asset Turnover (x)
Inventory (days)
Debtors (days)
Other Current Assets (days)
Payables (days)
Other Current Liab & Provns (days)
Cash Conversion Cycle (days)
Debt/EBITDA (x)
Net D/E (x)
Interest Coverage (x)
PER SHARE DATA (Rs)
EPS
CEPS
Dividend
Book Value
VALUATION
P/E (x)
P/BV (x)
EV/EBITDA (x)
EV/Revenues (x)
OCF/EV (%)
FCF/EV (%)
FCFE/Mkt Cap (%)
Dividend Yield (%)
FY14
FY15
FY16E
FY17E
FY18E
66.9
12.3
6.1
11.7
12.4
8.6
63.4
13.9
6.4
14.9
14.0
11.0
65.0
13.4
6.3
12.4
12.5
9.7
64.7
13.3
6.5
11.0
12.9
9.6
64.7
13.3
6.4
11.7
13.2
10.0
32.7
4.0
33.2
108.8
71.7
22.2
39.9
151.6
1.9
0.3
5.0
32.1
4.1
52.0
85.8
76.3
25.3
34.6
154.2
1.6
0.5
3.9
35.0
4.2
45.0
85.0
91.0
22.0
42.0
157.0
0.5
0.0
6.5
34.1
4.2
45.0
90.0
91.0
25.0
42.0
159.0
0.9
0.1
6.6
33.0
4.3
45.0
90.0
92.0
25.0
42.0
160.0
1.0
0.1
6.5
16.5
23.8
0.8
158.0
24.0
34.3
1.9
180.5
23.1
34.1
1.5
246.9
27.8
39.3
1.5
273.6
33.1
47.4
1.5
305.6
30.1
3.1
15.2
1.9
7.7
5.2
5.5
0.1
20.7
2.7
10.6
1.5
2.7
(1.6)
(0.3)
0.4
21.5
2.0
9.9
1.3
1.3
(1.8)
(11.7)
0.3
17.9
1.8
8.8
1.2
2.2
(0.9)
3.7
0.3
15.0
1.6
7.7
1.0
2.5
(0.5)
1.8
0.3
Page | 27
Income Statement (Consolidated)

Net Revenues
Growth (%)
Material Expenses
Employee Expenses
Other Operating Expenses
EBITDA
EBITDA Margin (%)
EBITDA Growth (%)
Depreciation
EBIT
Other Income (Including EO
Items)
Interest
PBT
Tax (Incl Deferred)
RPAT
Minority Interest
Profit/Loss from Associates
APAT
APAT Growth (%)
Adjusted EPS (Rs)
EPS Growth (%)
Balance Sheet (Consolidated)
FY14
13,600
4.2
4,309
619
6,918
1,754
12.9
12.3
402
1,353
FY15
18,609
36.8
6,174
814
8,823
2,799
15.0
59.5
603
2,196
FY16E
23,037
23.8
9,090
892
9,106
3,948
17.1
41.1
1,178
2,770
FY17E
28,249
22.6
10,626
1,071
10,597
5,954
21.1
50.8
1,738
4,216
FY18E
33,079
17.1
12,358
1,231
12,586
6,904
20.9
16.0
2,053
4,852
108
121
136
135
143
609
852
346
506
45
552
(32.2)
13.86
(26.1)
925
1,392
479
913
(0)
913
80.3
22.94
65.5
1,170
1,737
684
1,052
(222)
830
15.2
16.27
(29.1)
2,261
2,090
811
1,279
(23)
1,256
21.5
24.62
51.3
2,277
2,718
930
1,788
45
1,834
39.9
35.95
46.0

SOURCES OF FUNDS
Share Capital - Equity
Reserves
Total Shareholders Funds
Minority Interest
Long Term Debt
Short Term Debt
Total Debt
Net Deferred Taxes
Long Term Provisions & Others
TOTAL SOURCES OF FUNDS
APPLICATION OF FUNDS
Net Block
CWIP
Investments
Total Non-current Assets
Inventories
Debtors
Cash & Equivalents
Total Current Assets
Creditors
Other Current Liabilities & Provns
Total Current Liabilities
Net Current Assets
TOTAL APPLICATION OF FUNDS
FY14
FY15
FY16E
FY17E
FY18E
398
6,699
7,097
1
7,431
2,819
10,250
31
1,030
18,409
398
8,313
8,711
1
13,066
3,859
16,924
10
2,587
28,232
510
13,003
13,513
1
16,607
1,193
17,800
10
3,202
34,526
510
14,199
14,709
1
15,893
2,593
18,485
10
3,927
37,131
510
15,973
16,483
1
14,901
3,493
18,393
10
4,598
39,485
6,489
5,926
1,051
13,466
1,048
1,917
2,619
1,156
6,740
875
922
1,797
4,943
18,409
6,833
14,822
938
22,593
2,225
2,644
3,101
411
8,381
1,111
1,631
2,742
5,639
28,232
25,491
70
715
26,276
2,397
3,764
4,601
882
11,644
1,376
2,019
3,394
8,250
34,526
24,553
70
692
25,315
2,998
5,770
5,601
1,610
15,978
1,687
2,475
4,162
11,816
37,131
23,351
70
738
24,158
3,615
6,824
6,501
3,260
20,201
1,976
2,899
4,874
15,327
39,485
Page | 28
Cash Flow (Consolidated)

Reported PBT
Non-operating & EO items
Interest expenses
Depreciation
Working Capital Change
Tax Paid
Profit loss from Associates
OPERATING CASH FLOW ( a )
Capex
Free cash flow (FCF)
Investments
INVESTING CASH FLOW ( b )
Debt Issuance/(Repaid)
Interest Expenses
FCFE
Share Capital Issuance
Dividend
FINANCING CASH FLOW ( c )
NET CASH FLOW (a+b+c)
Closing Cash & Equivalents
Key Ratios (Consolidated)

FY14
852
(58)
609
402
(84)
(333)
FY15
1,392
(60)
925
603
107
(500)
FY16E
1,737
(136)
1,170
1,178
(1,524)
(684)
FY17E FY18E
2,090
2,718
(135)
(143)
2,261
2,277
1,738
2,053
(2,114) (1,189)
(811)
(930)
1,388
2,468
1,740
3,029
4,786
(5,419) (9,862) (5,084)
(800)
(850)
(4,032) (7,394) (3,343)
2,229
3,936
(128)
114
(5,547) (9,749) (5,084)
(800)
(850)
5,157
7,484
876
685
(92)
(542)
(855) (1,034) (2,127) (2,134)
583
(766) (3,501)
788
1,710
4,032
(35)
(93)
(60)
(60)
(60)
4,580
6,536
3,814 (1,501) (2,285)
420
(745)
471
728
1,650
1,156
411
882
1,610
3,260
Year ending March

PROFITABILITY (%)
GPM
EBITDA Margin
APAT Margin
RoE
RoIC (or Core RoCE)
RoCE
EFFICIENCY
Tax Rate (%)
Fixed Asset Turnover (x)
Inventory (days)
Debtors (days)
Other Current Assets (days)
Payables (days)
Other Current Liab & Provns (days)
Cash Conversion Cycle (days)
Debt/EBITDA (x)
Net D/E (x)
Interest Coverage (x)
PER SHARE DATA (Rs)
EPS
CEPS
Dividend
Book Value
VALUATION
P/E (x)
P/BV (x)
EV/EBITDA (x)
EV/Revenues (x)
OCF/EV (%)
FCF/EV (%)
FCFE/Mkt Cap (%)
Dividend Yield (%)
FY14
FY15
FY16E
FY17E
FY18E
68.3
12.9
3.7
7.8
5.0
5.7
66.8
15.0
4.9
11.6
5.4
6.5
60.5
17.1
4.6
9.5
5.1
5.6
62.4
21.1
4.5
9.1
7.4
7.4
62.6
20.9
5.4
11.5
9.0
8.6
40.6
1.7
28.1
51.5
70.3
23.5
24.7
101.7
5.8
1.3
2.2
34.4
2.1
43.6
51.9
60.8
21.8
32.0
102.6
6.0
1.9
2.4
39.4
0.8
38.0
59.6
72.9
21.8
32.0
116.7
4.5
1.3
2.4
38.8
1.0
38.7
74.6
72.4
21.8
32.0
131.9
3.1
1.1
1.9
34.2
1.1
39.9
75.3
71.7
21.8
32.0
133.1
2.7
0.9
2.1
13.9
22.8
0.8
178.3
22.9
38.1
1.0
218.8
16.3
43.7
1.0
264.9
24.6
59.1
1.0
288.4
35.9
75.3
1.0
323.1
35.8
2.8
16.4
2.1
4.8
(14.0)
3.0
0.2
21.6
2.3
13.0
1.9
6.8
(20.4)
(3.9)
0.2
30.5
1.9
10.7
1.8
4.1
(7.9)
(13.8)
0.2
20.1
1.7
7.1
1.5
7.2
5.3
3.1
0.2
13.8
1.5
5.9
1.2
11.8
9.7
6.8
0.2
Page | 29
RECOMMENDATION HISTORY
PNC Infratech
Date
30-Mar-16
TP
650
CMP
496
Reco
BUY
Target
625
600
550
500
450
400
350
Mar-16
Feb-16
Jan-16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
300
Rating Definitions
BUY
: Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL
: Where the stock is expected to deliver less than (-)10% returns over the next 12 month period
Page | 30
Disclosure:
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report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific
recommendation(s) or view(s) in this report.
Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its
Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further
Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest.
Any holding in stock No
Disclaimer:
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INITIATING COVERAGE

CMP (as on 29 Mar 2016)

KEY STOCK DATA

No. of Shares (mn)

MCap (Rs bn) / ($ mn)

6m avg traded value (Rs mn)

STOCK PERFORMANCE (%)

SHAREHOLDING PATTERN (%)

FIs & Local MFs

Conservative bids provide margin comfort: PNC

ranks high on bidding discretion, with its

control on execution. This partly explains the high

Source : Company, HDFC sec Inst Research

PNC INFRATECH: INITIATING COVERAGE

PNC INFRATECH: INITIATING COVERAGE

NHAI Project Details

Trend in NHAI project awards

Hybrid Annuity (kms)

The authority plans to

awarded contracts for 3,514km of roads (2,526km

all under the BOT mode. However, project

In order to attract private

NHAI achieved its peak award of 6,491km in FY12

Project award activity

Capitalising on robust roads order pipeline

NHAI achieved its peak

Source: NHAI, Company, HDFC sec Inst Research

PNC INFRATECH: INITIATING COVERAGE

We dont perceive PNCs

NHAI is yet to award

PNC-focused states are also

Dedicated freight corridor is

Huge opportunity in PNC-dominated states

segment with huge ordering potential. It is likely

companys performance is on a par with other

Source : NHAI, Company, HDFC sec Inst Research

PNC INFRATECH: INITIATING COVERAGE

PNCs cumulative NHAI EPC

Conservative bids provide margin comfort

PNCs aggregate win value is 7.2% higher than the

This gives us comfort on

comparing our coverage universe, we found that

NHAI and aggregated the wins across key EPC

Additionally, PNC has location advantage in Uttar

The aggressive bidding by EPC players of late has

Pradesh. Its recent NHAI wins are in close

Projects Awarded Under EPC In YTDFY16

Sadbhav Engineering has bid

EPC Work Cost (INR

Awarded Cost (INR mn)

Source: NHAI, Company, HDFC sec Inst Research

PNC INFRATECH: INITIATING COVERAGE

NHAI has now eased the

In case of BOT projects, the

NHAI has introduced onetime fund infusion to revive

Policy interventions to improve project awards and execution

NHAI has now eased the project clearance

process, with 90% of the land being acquired

Premium rescheduling has also been allowed for

After witnessing limited developer interest in BOT

introduced the Hybrid Annuity Model (HAM) for

Additionally, NHAI has introduced one-time fund

infusion to revive unfinished BOT projects where