PNC Infratech jumps 9% after bagging two EPC projects worth Rs 1,548 crore

Shares of PNC Infratech surged nearly 9 per cent on the BSE on Friday after the company announced it has bagged two highway construction contracts worth over Rs 1,500 crore, after the Union government cancelled the lowest bid submitted by the Chinese company, Jiangxi Construction.

At 09:25 am, the stock was trading 6.57 per cent higher at Rs 149 on the BSE. It hit a high of Rs 152.35 in the opening deals against Thursday's close of Rs 139.95. In comparison, the benchmark S&P BSE Sensex was trading around 0.6 per cent lower at 37,925 levels. 

In an announcement to the stock exchanges, PNC Infratech said that the company received LOA (letter of award) from NHAI (National Highways Authority of India) for two EPC projects of Delhi - Vadodara alignment of the 8-lane access controlled greenfield expressway for an aggregate contract value of Rs 1,547.80 crore.

The bids for these contracts were submitted in January this year and opened in March.

Chinese firm Jiangxi Construction had emerged as the lowest bidder. The bids submitted by Jiangxi Construction have been annulled after the government decided to restrict Chinese companies in India, according to this Business Standard report.

Analysts at ICICI Securities, post the company's March quarter numbers for the fiscal year 2019-20 (Q4FY20), had written that PNC Infratech remains its preferred pick in the Engineering, procurement, construction (EPC) space given its robust order book, comfortable working capital cycle, healthy return ratios and lean balance sheet.

"Notwithstanding near-term hiccups on account of Covid-19, PNC is likely to tide over with resilient fundamentals. While monetisation of Build–operate–transfer (BOT) / Hybrid Annuity Model (HAM) assets could be delayed in the near term, we do not see it as a major issue with sufficient internal accruals from current order book enough for equity infusion. We maintain our BUY rating on the stock with a revised sum-of-the-parts (SoTP) target price of Rs 175/share," the brokerage said in a report issued on June 28.