PNC Infratech Limited – IPO

Business of PNC Infratech Limited
 

PNC Infratech Limited was incorporated in 1999 and is headquartered in Agra. The company is in the business of engineering and construction and engages in infrastructure projects like highways, bridges, flyovers and airport runways among others.
 

PNC Infratech has execute 14 projects till date, out which 12 have been executed independently and 2 with joint ventures with other companies. Right now PNC Infratech is executing 18 projects out of which 15 are being run independently and 3 with JV Partners. The majority of these are in road construction which is valued at Rs.8,947.9 million spread across 13 projects and the remaining 5 projects relate to runway construction in airports summing up to Rs.996.8 million.
 

The major clients of the company are National Highway Authority of India, Airports Authority of India, Public Works Department, RITES Limited (GOI Enterprise), Military Engineer Services (Ministry of Defence) and Madhya Pradesh Road Development Corporation.
 

Financials of PNC Infratech Limited
 

The company has grown decently in the last five years both in terms of top line and bottom line growth. The revenues have increased from Rs.715.3 million in the year ending March 2003 to Rs.2,564.20 million in March 2007. The profit after tax has also grown from Rs.14.46 million to Rs.132.17 million in the given period. The EPS has grown steadily from Rs. 2.39 in Fiscal 2005, Rs.4.32 in Fiscal 2006 to Rs.6.11 in the last fiscal. For the trailing twelve months the EPS has been valued at Rs.12.23.
 

Objects of the Issue
 

The IPO is being brought out primarily to raise money to invest in capital equipments, prepayment of debt / advances, equity investments in JV / SPVs for BOT projects and funding working capital requirements.

 

Conclusion
 
PNC Infrastructure is in one of the key sectors in the Indian economy where there has been significant growth and is expected to continue in the future as well. The company has done well in the past and that is a good indication of the future. If the issue is not an unreasonable P/E margin for a new issue it should be worth a good bet for the long term investor.