Geojit Financial Services has issued a BUY recommendation on PNC Infratech Ltd., setting a target price of Rs 386—implying a 27% upside from the current market price of Rs 305. The report highlights PNC’s robust order book, successful monetization of road assets, and its renewed eligibility to bid for major infrastructure projects following the removal of the NHAI ban. Despite a temporary revenue dip and margin compression in Q4FY25, the company’s strategic diversification and strong balance sheet position it well for a growth rebound. Investors are advised to leverage the current valuation, as PNC’s expansion into new segments and anticipated order inflows are expected to drive a rerating in the coming quarters.

Geojit Maintains BUY Call: Strategic Rationale and Investment Thesis

Robust Order Book Ensures Revenue Visibility
PNC Infratech commands an order book of Rs 17,792 crore, representing 3.2 times its FY25 revenue, which provides formidable visibility for future earnings. The company’s eligibility to bid for NHAI and MoRTH projects, post removal of the ban, is a significant catalyst. Management anticipates order inflows worth Rs 15,000 crore in FY26, reinforcing the growth outlook.

Q4FY25: Transitory Weakness, Long-Term Strength Intact
The fourth quarter of FY25 saw a 39.6% year-on-year decline in revenue, aligning with expectations and primarily attributable to execution delays and the lag in appointed dates. EBITDA margin contracted by 70 basis points to 12.4%. Nevertheless, management projects a 20% revenue growth in FY26, with EBITDA margins expected to recover to 13%, signaling a return to operational normalcy.

Strategic Monetization of HAM Assets
A pivotal move was the completion of monetization for ten Hybrid Annuity Model (HAM) projects, yielding an equity consideration of Rs 1,828 crore—1.33 times the initial investment. This transaction strengthens the balance sheet and provides capital for diversification into other infrastructure verticals. The sale of the remaining two HAM assets is expected to conclude in the first half of FY26.

Diversification into Railways and Water Segments
PNC is actively expanding beyond its core road segment, with 17% of its order book now comprising water and canal projects. This strategic diversification mitigates sector-specific risks and unlocks new growth avenues, particularly as the government’s infrastructure push broadens to multi-modal projects.

Financial Performance and Valuation Metrics

Key Financial Highlights

FY25 revenue stood at Rs 5,513 crore, a 28.4% decline year-on-year, but is projected to rebound by 20.1% in FY26 and 18.3% in FY27.

Adjusted PAT for FY25 was Rs 709 crore, with a forecasted jump to Rs 658 crore by FY27, after a temporary dip in FY26.

The company maintains a lean balance sheet with a debt-to-equity ratio of 0.1, and a healthy return on equity (ROE) of 13.9% in FY25, expected to stabilize above 10% in subsequent years.

Valuation and Target Price Justification
Geojit’s target price of Rs 386 is predicated on a sum-of-the-parts (SOTP) valuation, applying a P/E multiple of 14x FY27 estimated earnings for the core EPC business and 0.5x P/B for HAM assets. At the current market price of Rs 305, the implied upside is 27% over a 12-month horizon.

Shareholding Pattern and Market Performance

Stable Promoter Holding, Institutional Interest Remains High
Promoters retain a 56.1% stake, with no pledged shares, underscoring confidence in the company’s prospects. Mutual funds and institutional investors hold 26.3%, while FIIs own 7.1%. The public shareholding stands at 10.6%.

Stock Performance: Recovery Potential Evident
Despite a 37% decline over the past year, the stock’s underperformance relative to the Sensex (-46% relative return) presents a compelling entry point. Recent quarters have seen stabilization, and the anticipated earnings rebound could catalyze a rerating.

Order Book Composition and Execution Pipeline

Order Book Breakdown
The company’s order book is well-diversified, with a growing share in non-road segments, as illustrated below:

Execution Pipeline
Out of 13 HAM projects, three have achieved provisional commercial operation date (PCOD), six are under construction, and three have secured financial closure. The remaining project is pending documentation, ensuring a steady execution pipeline.

Key Investment Levels and Targets

Recommended Levels for Investors

Current Market Price (CMP): Rs 305

Target Price (12 Months): Rs 386

Stop Loss: Rs 270 (suggested for risk management)

Key Support: Rs 295

Key Resistance: Rs 340, Rs 386

Risks and Catalysts

Potential Risks

Execution delays due to regulatory or project-specific hurdles

Margin pressures from rising input costs or competitive bidding

Slower-than-expected order inflows in non-road segments

Key Catalysts

Successful closure of pending HAM asset sales

Faster ramp-up in railway and water segment orders

Policy tailwinds from government infrastructure initiatives

Bottomline: Investment Perspective

PNC Infratech stands at an inflection point, with its robust order book, strategic asset monetization, and sectoral diversification positioning it for a strong earnings revival. The stock’s current valuation offers an attractive risk-reward profile, and Geojit’s BUY call with a target of Rs 386 underscores confidence in the company’s ability to capitalize on upcoming opportunities. Investors seeking exposure to the infrastructure sector should consider accumulating PNC at current levels, with a medium-term horizon to realize the anticipated upside