Domestic brokerage SMIFS Ltd has projected strong upside for PNC Infratech Ltd, estimating a potential gain of nearly 38 per cent despite the company’s suboptimal performance in the June 2025 quarter (Q1 FY26).
The smallcap civil construction player reported weaker results both year-on-year (YoY) and quarter-on-quarter (QoQ), with revenue impacted by delays in receiving appointed dates (ADs) for certain HAM projects. Margins also moderated due to lower revenues and diseconomies of scale.
However, PNC has maintained its growth outlook, guiding for a 15-20 per cent revenue increase in FY26 and a similar trajectory in FY27. Margins are also expected to normalise around 13 per cent as execution picks up and order book composition improves. A key highlight for Q1 remained the strong order inflow in year-to-date (YTD) FY26, with the company confident of sustaining the momentum on the back of a robust bidding pipeline.
On the balance sheet front, gross borrowings have significantly reduced following asset monetisation, with one HAM asset still pending transfer that could further strengthen financials. Receivables under the Jal Jeevan Mission (JJM) continue to remain elevated due to delayed central government payments, though SMIFS expects a meaningful recovery by Q3 FY26 as funding normalises.
“Overall, the balance sheet has been reinforced, while receipt of ADs should drive improved financial performance. We maintain our BUY rating,” SMIFS said.
The brokerage expects PNC to post a 19.4 per cent revenue CAGR and 36.6 per cent adjusted PAT CAGR over FY25-27E, supported by stronger execution and better order inflows. At current levels, the stock (excluding investments) trades at 7.9x FY27E P/E. Using a SOTP-based valuation, SMIFS has set a target price of Rs 430 per share.
As of Tuesday’s trade, PNC Infratech shares were up 0.92 per cent at Rs 312.55, reflecting an upside potential of 37.58 per cent from current levels.