Result Update

Rating matrix PNC Infratech (PNCINF) | 152 Rating : Buy Target : | 190 Target Period: 12-18 months Potential Upside: 25% HAM projects to keep execution strong…  PNC Infratech’s (PNC) revenues grew significantly by 108.0% YoY to What’s changed? | 558.6 crore in Q2FY19 led by strong execution. However, it was Target Changed from | 215 to | 190 below our expectation of | 603.3 crore EPS FY19E Changed from | 7.4 to | 7.3  EBITDA margin contracted 142 bps YoY to 13.4% on account of EPS FY20E Changed from | 10.4 to | 10.3 higher raw material expenses (68.3% as percentage of revenues in Rating Unchanged Q2FY19 vs. 65.3% in Q2FY18) and in line with our estimate of 13.6%  PAT grew robustly by 110.9% YoY to | 35.1 crore in Q2FY19, below Quarterly Performance our expectation of | 59.4 crore mainly on account of lower-than- Q2FY19Q2FY18YoY (%)Q1FY19QoQ (%) Revenue 558.6268.6108.0735.5 -24.0 expected topline growth and higher tax rate of 21.6% in Q2FY19 EBITDA 74.639.788.0129.4 -42.4 Strong order book provides revenue visibility… EBITDA (%) 13.414.8 -142 bps 17.6 -424 bps PNC’s orderbook was strong at | 6119 crore, providing strong visibility PAT 35.116.6110.9102.5 -65.8 over the next two to three years. However, this does not include some projects viz. two EPC packages of Expressway worth | 2520 Key Financials crore, Nagpur-Mumbai expressway EPC package worth | 2000 crore and (| crore) FY17FY18FY19EFY20E three HAM projects worth | 3834 crore. Including these projects, PNC’s Net Sales 1,676.0 1,856.6 2,696.9 3,911.3 EBITDA 221.0 318.8 363.4 527.0 orderbook is strong at over | 14000 crore. The company received Net Profit 209.7 251.0 186.6 263.7 appointed date for both Purvanchal Expressway packages on October 10, EPS (|) 8.2 9.8 7.3 10.3 2018, which may start contributing to revenues from Q4FY19E. Appointed date for Nagpur-Mumbai Expressway is expected in December, 2018. Valuation summary Taking cues from such a sharp execution pick-up in FY19E, we expect a (x) FY17 FY18 FY19E FY20E robust topline growth of 45.1% to | 3911.3 crore in FY18E-20E. P/E 18.6 15.5 20.9 14.8 Healthy bid pipeline ahead... Target P/E 23.2 19.4 26.1 18.5 EV / EBITDA 18.1 12.2 11.9 8.8 NHAI has invited bids for 70 EPC & 30 HAM projects worth | 70,000 crore, P/BV 2.5 2.2 2.0 1.8 with due date expected in the next two to three months. These bids RoNW (%) 9.7 13.9 9.4 11.9 include 1250 km Delhi-Mumbai Expressway (25 packages) and 1316 km RoCE (%) 13.2 13.7 11.5 14.2 Amritsar-Jamnagar Expressway (22 packages), which are the biggest of these. The major component of these projects is expected on an EPC Stock data basis. PNC expects incremental | 4000 crore of opportunities in H2FY19E Particular Amount (| crore) from above mentioned bid pipeline. Market Capitalization 3,899.4 Equity requirement worth | 832 crore for HAM projects... Total Debt 335.0 Cash 58.0 PNC has seven HAM projects with bid project cost of | 8897 crore in its EV 4,176.4 kitty. While four of these projects are under execution, three are in the 52 week H/L (|) 228 / 123 process of receiving financial closure. These projects have total equity Equity capital 51.3 requirement of | 832 crore of which ~| 50 crore was infused in FY18. The Face value | 2 company will infuse an aggregate of | 220 crore, | 250 crore & | 312 crore in FY19E, FY20E & FY21E, respectively, which will be met through internal Comparative Return Matrix (%) accruals. Also, it has plans to monetise four of its BOT assets, of which, Return % 1M3M6M12M Ghaziabad-Aligarh BOT asset is undergoing due diligence while talks on Ashoka Buildcon 6.6 (15.4) (32.0) (15.5) the term sheet are underway. With a lean balance sheet, strong internal Sadbhav Engg (11.4) (14.6) (17.3) (11.2) accruals & inflows from monetisation of some projects, funding this equity IRB Infra 5.3 (27.3) (45.0) (36.8) requirement should not be an issue for PNC. PNC Infratech 8.4 (11.0) (15.3) (20.8) Buoyant orderbook lends comfort for strong execution; maintain BUY… PNC’s robust order book, strong execution capabilities and lean balance Research Analyst sheet with better WC management reinforce our confidence on the future Deepak Purswani, CFA prospects of the company. Also, we believe PNC is well poised to capture deepak,[email protected] huge opportunities ahead. We expect revenues to grow at a CAGR of Harsh Pathak 45.1% in FY18-20E given the significant ramp-up in execution from FY19E [email protected] onwards with receipt of appointed dates for several big-ticket projects. Hence, we maintain our BUY rating on the stock with a target price of | 190. We value its construction business at | 164/share (at 8x FY20E EV/EBITDA) and BOT & HAM projects at | 53/share (traffic growth assumption - 5% per annum).

ICICI Securities Ltd | Retail Equity Research Variance Analysis

Particulars Q2FY19 Q2FY19E Q2FY18YoY (%)Q1FY19QoQ (%) Comments Total Operating Income 558.6603.3268.6 108.0735.5 -24.0 Topline growth was led by strong execution during the quarter Other Income 6.117.95.216.717.9 -66.0 Net Raw material consumed 381.3412.8176.5116.0500.2 -23.8 Employee benefit expenses 42.254.323.877.640.64.1 Other Expenses 60.554.328.6111.765.3 -7.4 EBITDA 74.681.939.788.0129.4 -42.4 EBITDA Margin(%) 13.413.614.8 -142 bps 17.6 -424 bps Margin contraction on account of higher raw materials in Q2FY19

Depreciation 20.619.318.411.719.36.8 Interest 15.310.77.799.510.743.8 PBT 44.869.918.8138.4117.4 -61.9 Taxes 9.710.52.1 353.114.9 NM PAT 35.159.416.6 110.9102.5 -65.8 The growth in bottomline was mainly on account of strong topline growth

Source: Company, ICICI Direct Research

Change in estimates

FY17 FY18 FY19E FY20E Comments (| Crore) OldNew% ChangeOldNew% Change Revenue 1,676.01,856.62,696.9 2,696.90.03,911.3 3,911.30.0 We maintain our estimates EBITDA 221.0318.8366.0363.4 -0.7 534.8527.0 -1.5 EBITDA Margin (%) 13.117.213.613.5 -13 bps 13.713.5 -23 bps PAT 151.9251.0185.5186.60.6266.5263.7 -1.1 Diluted EPS (|) 8.29.87.27.30.610.410.3 -1.1 Source: Company, ICICI Direct Research

Assumptions

Current Earlier EPC FY15 FY16FY17FY18 FY19E FY20E FY19E FY20E Comments Order Inflow 1,832 3,972 5,668 7,750 6,150 4,150 6,150 4,150 We have maintained our estimates Order Backlog 3,445 5,400 9,392 15,286 18,738 18,977 18,738 18,977 Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 2 Conference Call Highlights:

 Management guidance & order book: The management has maintained its revenue guidance of 40-50% to | 2800 crore in FY19E and also guided for 35% revenue growth in FY20E. However, it would be reviewing its guidance post Q3FY19E when several big ticket projects would achieve financial closure. The order book of the company is at ~| 6100 crore as of Q2FY19, with an average execution period of two to three years  Bidding pipeline: The management said that NHAI has invited bids for 70 EPC projects and 30 HAM projects worth | 70,000 crore, with due date expected in the next two to three months. These bids are inclusive of 1250 km Delhi-Mumbai Expressway and 1316 km Amritsar-Jamnagar Expressway, which are the biggest projects of these 100 projects. The management said PNC will be bidding only for EPC projects considering the tight credit scenario within the construction sector, which may delay financial closure of new HAM projects, impacting execution  Appointed date & mobilisation advance: The management expects the appointed date for the Mumbai Nagpur expressway in Q3FY19E. Furthermore, it expects mobilisation advance to the tune of | 600 crore in H2FY19E  Equity requirement: PNC has a total equity requirement of | 782 crore over the next three years. The company is planning to infuse | 220 crore in FY19E, | 250 crore in FY20E and the balance in FY21E  Capex & debt: The company has guided for a capex of | 40-50 FY20E. Standalone net debt of PNC Infratech is at | 335 crore as of Q2FY19 and is expected to at | 400 crore, | 400-500 crore in FY19E, FY20E, respectively. Standalone D/E for the company is at 0.14 as of Q2FY19  Arbitration award: The company was awarded | 160 crore in the Narela arbitration case. It has received | 46 crore as of Q2FY19

 Land acquisition status: The land acquisition status for several projects stands as follow: 98-100% for Dausa-Lalsot, 96% for Chitradurga-Davanagere, 86% for Jhansi-Khajuraho Package 1, 92% for Jhansi-Khajuraho Package 2, 89% for Chakeri-Allahabad, 90% for Aligarh-Kanpur, 80% for Challakere-Hariyur  Toll collections: Toll collections in Q2FY19 for various projects are as follows: | 17 crore for Kanpur-Kabrai, | 78 crore in Kanpur- , | 9 crore in Bareilly-Almora and | 51 crore for Ghaziabad-Aligarh project. The toll collections de-grew YoY for these projects mainly because of the impact of monsoon on traffic at the tolls

ICICI Securities Ltd | Retail Equity Research Page 3 Company Analysis

Exhibit 1: Key EPC projects under execution…

35.0 30.0 25.0

20.0 (%) 15.0 10.0 5.0 FY13FY14FY15FY16FY17FY18FY19EFY20E

RoE RoCE RoIC

Adjusted RoCE Adjusted RoIC

Source: Company, ICICI Direct Research

Exhibit 2: Strong order book, consistent order inflow…

20000 6.9 8.0

5.6 15000 4.9 6.0

10000 4.0 2.7 (x) 2.3 7750 ( | crore) 6150 5668 4150 3972 5000 3911 2.0 2697 2017 1857 1832 1676 1530

0 3445 5400 9392 15286 18738 18977 0.0 FY15 FY16 FY17 FY18 FY19E FY20E

Orderinflow Revenue Closing orderbook Orderbook to bill (x)

Source: Company, ICICI Direct Research

Exhibit 3: Net working capital days & debt-equity trend…

130 0.7 0.5 0.4 0.4 0.5 110 0.3 0.3

0.3 (x)

(days) 0.1 90 0.1

0.0 0.1

98 98 109 131 113 113 112 70 110 -0.1 FY13 FY14 FY15 FY16 FY17 FY18 FY19E FY20E

Net Working Capital days Debt-Equity

Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 4 Exhibit 4: BOT project summary

Equity invested PNC's share of invested Debt outstanding Project % StakeAuthorityStateStretchType Kms Lanes (| crore) equity (| crore) (| crore) Ghaziabad Aligarh 35 NHAI UP NH-91Toll 125.0 4 194.0 67.9 1136.0 Kanpur Kabrai 100 NHAI UP NH-86Toll 123.0 2 67.5 67.5 209.0 Gwalior Bhind 100 MPRDC MP NH-92Toll 107.7 2 78.3 78.3 197.0 Bareilly Almora* 100 UPSHA UP SH-37Toll 54.0 4 74.6 74.6 443.0 Rae Bareli Jaunpur* 100 NHAI UP NH-23Annuity 166.4 2 139.6 139.6 631.0 Narela Industrial Estate 100 DSIIDCDelhi NA Annuity 33.0 NA 35.0 35.0 83.0 Kanpur Ayodhya 100 NHAI UP NH-28OMT 217.0 4 0.1 0.1 - Total 826.1 589.1 463.0 2699.0 Source: Company, ICICI Direct Research *Bareilly Almora commenced its operation in October, 2015

Exhibit 5: HAM project summary Total Project cost (| PNC's share of invested Project % Stake Authority State/Stretch Stretch Type Kms Lanes crore) equity (| crore) Dausa-Lalsot 100 NHAI Rajasthan NH-11A Hybrid 83.5 4 820.0 46.0 Chitradurga–Davanagere^ 100 NHAI Karnataka NH-48 Hybrid 72.7 6 1338.0 55.0 Jhansi-Khajuraho (Package I) ^ 100 NHAI UP & MP NH-75/76 Hybrid 76.3 4 1342.0 5.0 Jhansi-Khajuraho (Package II) ^ 100 NHAI UP & MP NH-75/76 Hybrid 85.4 4 1262.0 43.0 Chakeri-Allahabad ** 100 NHAI UP NH-2 Hybrid 145.1 6 2018.0 0.3 Aligarh Kanpur*** 100 NHAI UP NH-91 Hybrid 45.0 4 1104.0 0.3 Challakere - Hariyur** 100 NHAI Karnataka NH-150 A Hybrid 55.7 4 1013.0 0.0 Total 563.7 8897.0 149.5 Source: Company, ICICI Direct Research ^Financial Closure Achieved; * Bid Project Cost; **LOI Received ***SPV formed

We expect revenues to witness robust growth of 45.1% Exhibit 6: Revenue growth momentum to continue… CAGR to | 3911.3 crore in FY18-20E with a pick-up in execution 5000.0

4000.0

45.1% CAGR

3000.0 (| crore) (| 2000.0

1000.0

1676.0 1856.6 2696.9 3911.3 0.0 1992.1 FY16 FY17 FY18 FY19E FY20E

Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 5 Exhibit 7: EBITDA & EBITDA margin trend… We expect the EBITDA margin to improve to 13.7% in FY20E 600.0 16.0

500.0 28.6% 14.0 400.0

300.0 12.0 (%)

(| crore) 200.0 10.0

100.0

155.8 141.9 216.6 265.9 221.0 318.8 363.4 527.0 0.0 153.5 8.0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19E FY20E

EBITDA EBITDA Margin

Source: Company, ICICI Direct Research

Exhibit 8: PAT growth trend…

300.0 13.0%

250.0 11.0% 200.0

9.0% (%)

(| crore) (| 150.0 7.0%

100.0

100.4

154.0

151.9

251.0 186.6 50.0 263.7 5.0% FY15FY16FY17FY18FY19EFY20E

PAT PAT Margin(%)

Source: Company, ICICI Direct Research

Exhibit 9: Return ratios trend…

35.0 30.0 25.0

20.0 (%) 15.0 10.0 5.0 FY13 FY14 FY15 FY16 FY17 FY18 FY19E FY20E

RoE RoCE RoIC

Adjusted RoCE Adjusted RoIC

Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 6 Outlook and Valuation

We value its construction business at | 164/share (at 8x PNC’s robust order book, strong execution capabilities and lean balance FY20E EV/EBITDA) and BOT & HAM projects at | sheet with better WC management reinforce our confidence on the future 53/share (traffic growth assumption – 5% per annum) prospects of the company. Also, we believe PNC is well poised to capture huge opportunities ahead. We expect revenues to grow at a CAGR of 45.1% in FY18-20E given the significant ramp-up in execution from FY19E onwards with receipt of appointed dates for several big-ticket projects. Hence, we maintain our BUY rating on the stock with a target price of | 190. We value its construction business at | 164/share (at 8x FY20E EV/EBITDA) and BOT & HAM projects at | 53/share (traffic growth assumption - 5% per annum).

Exhibit 10: SoTP valuation

Entity Value (| crore)Per share (|) Comment We consider traffic growth assumption of 5% per annum and CoE of 12% for annuity and 13% for toll Construction Business 4,216 164 8x FY20 EV/EBITDA based projects BOT Projects 1,360 53 Ghaziabad Aligarh 116 5 Bareilly Almora 79 3 Gwalior Bhind 192 8 Raibereli Jaunpur 89 3 Narela Industrial Area 150 6 Kanpur Kabrai 234 9 New Projects 500 19 Less:Net Debt 720 28 FY20E net debt Target Price 4,856 189 Rounded off target price 190 Source: Company, ICICI Direct Research

EPC business: We value PNC’s EPC business at | 164/share (at 8x FY20E EV/EBITDA) considering its reputation of timely/early completion, strength in balance sheet and better return profile.

BOT projects: We value PNC’s BOT project portfolio on a free cash flow to equity (FCFE) basis. To value it, we consider a traffic growth rate of 5% per annum (except Ghaziabad Aligarh project where we have considered a nil growth in FY18E traffic due to a sharp hike in toll rate following full CoD) and then 5% per annum). We also consider the cost of equity of 13% for toll based projects and 12% for annuity projects. Based on these assumptions, we value PNC’s BOT portfolio at | 53/share.

ICICI Securities Ltd | Retail Equity Research Page 7 Recommendation history vs. Consensus

300 125.0

100.0 225

75.0

(|) 150 (%) 50.0

75 25.0

0 0.0 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Nov-17 Feb-18 May-18 Aug-18 Nov-18

Price Idirect target Consensus Target Mean % Consensus with BUY

Source: Bloomberg, Company, ICICI Direct Research

Key events Date Event Mar-16 PNC Infratech declared L1 bidder for 4-laning of -Gorakhpur section of NH-29 from 12 to 88 km (Package II from Sandah to Birnon) in under NHDP Phase-IV . The contract is worth ~| 869 crore and is to be executed on EPC basis. Mar-16 PNC Infratech achieves CoD of -Jaunpur BOT project and is entitled to receive semi annual annuity of | 64.3 crores each during the remaining 15 years of the concession period Mar-16 Receives letter of acceptance (LoA) for the project of construction of three lane road on both sides of Sharda Sahayak Feeder Canal from - to Lucknow-Sultanpur road worth | 205.7 crore in UP Mar-16 Declared lowest bidder for project of four laning of Nagina-Kashipur section of NH-74 from 73 to 175 km in the states of Uttarakhand and UP under NHDP IV. The contract amount for this NHAI project to be executed on EPC basis is | 1155.7 crore Apr-16 Declared L1 (lowest) bidder for upgradation of Nanau-Dodon section in Aligarh district, UP worth | 119.9 crore Apr-16 CARE upgrades credit ratings on long term bank facilities (senior debt) to CARE A- from CARE BBB and subordinate debt to CARE BBB+ from CARE BBB- of PNC Raibareli Highways Pvt Ltd, a subsidiary of PNC Infratech May-16 PNC Infratech declared L1 (lowest) bidder for extension and resurfacing of runway at Air Force Station, Bakshi Ka Talab, near Lucknow. The bid amount for this project of Military Engineering Services, is | 140.6 crores. Jul-16 PNC Infratech declared lowest bidder for ₹ 881 crore highway project under Hybrid annuity mode. The project entails four-laning and two-laning of the Dausa-Lalsot- Kautham section (83.5 km) of National Highway 11A in Rajasthan. Jul-16 PNC Infratech awarded an EPC project involving four laning of the Etah to Kasganj road in Uttar Pradesh for a contract value of | 232.9 crore [ Source: Company, ICICI Direct Research Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m) Change (m) (in %)Dec-17Mar-18Jun-18Sep-18 1 NCJ Infrastructural Consultants Pvt. Ltd. 2-Jul-18 9.7%24.8 -1.9 Promoter 56.156.156.156.1 2 Jain (Yogesh Kumar) 30-Jun-18 8.5%21.90.0 Public 43.943.943.943.9 3 HDFC Asset Management Co., Ltd. 31-Aug-18 8.2%21.1 -0.6 Others 0.00.00.00.0 4 Jain (Pradeep Kumar) 30-Jun-18 8.0%20.60.0 Total 100.0100.0100.0100.0 5 Jain (Navin Kumar) 30-Jun-18 7.1%18.10.0 6 Jain (Madhavi) 30-Jun-18 7.0%18.00.0 7 Jain (Vaibhav) 30-Jun-18 4.5%11.70.0 8 ICICI Prudential Asset Management Co. Ltd. 31-Aug-18 4.0%10.30.1 9 Jain (Chakresh Kumar) HUF 30-Jun-18 3.6%9.30.0 10 Jain (Ashita) 30-Jun-18 3.1%7.90.0

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Source: Reuters, ICICI Direct Research Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares Daiwa Asset Management (Singapore) Ltd. 0.6 0.3 Pppl Constructions Pvt. Ltd. -55.3 -23.9 IDFC Asset Management Company Private Limited 0.3 0.2 NCJ Infrastructural Consultants Pvt. Ltd. -4.4 -1.9 ICICI Prudential Asset Management Co. Ltd. 0.1 0.1 HDFC Asset Management Co., Ltd. -1.3 -0.6 DHFL Pramerica Asset Managers Private Limited 0.1 0.1 SBI Funds Management Pvt. Ltd. -0.8 -0.5 Affin Hwang Asset Management Berhad 0.0 0.0 Aditya Birla Sun Life AMC Limited -0.7 -0.3 Fi nancial Summary Source: Reuters, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 8 Exhibit 11: Profit & Loss Statement Exhibit 12: Cash Flow Statement

(Year-end March) FY17FY18FY19EFY20E (Year-end March) FY17 FY18 FY19E FY20E Net Sales 1,676.0 1,856.6 2,696.9 3,911.3 Profit after Tax 209.7 251.0 186.6 263.7 Other operating income 13.2 - - - Depreciation 53.3 77.2 87.5 109.9 Other income 46.6 23.0 8.7 4.0 Interest Paid (46.6) (23.0) (8.7) (4.0) Total Revenues 1,735.7 1,879.6 2,705.6 3,915.3 Cash Flow before WC changes 221.0 318.8 363.4 527.0 Raw Material Expense 1,161.8 1,218.2 1,869.3 2,711.1 Net Increase in Current Assets (162.5) (154.2) (640.7) (920.9) (Increase)/decrease in inventories of WIP 24.8 6.0 8.8 12.7 Net Increase in Current Liabilities 157.9 177.0 385.2 556.7 Employee benefit expenses 100.3 124.0 180.1 261.2 Net CF from Operating Activities 232.2 358.7 58.3 74.9 Other Expenses 181.2 189.6 275.4 399.3 (Purchase)/Sale of Fixed Assets (13.5) (128.0) (225.0) (50.0) Total Operating Expenditure 1,468.1 1,537.8 2,333.5 3,384.3 Purchase of Investment (264.2) (64.9) (225.0) (225.0) EBITDA 221.0 318.8 363.4 527.0 Interest Income 46.6 23.0 8.7 4.0 Interest 20.3 30.7 48.3 69.5 Net CF from Investing Activities (231.1) (169.9) (441.3) (271.0) Depreciation 53.3 77.2 87.5 109.9 Proceeds from share capital - - - - PBT 193.9 233.9 236.3 351.6 Interest Paid (20.3) (30.7) (48.3) (69.5) Total Tax (15.8) (17.1) 49.6 87.9 Net CF from Financing Activities 96.0 (72.6) 306.0 156.2 Reported PAT 209.7 251.0 186.6 263.7 Net Cash flow 97.1 116.2 (77.1) (39.8) Adjusted PAT 151.9 251.0 186.6 263.7 Opening Cash/ Cash Equivalent 97.1 35.5 147.3 70.2 EPS (Diluted) 8.2 9.8 7.3 10.3 Closing Cash/ Cash Equivalent 35.5 147.3 70.2 30.4 Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

Exhibit 13: Balance Sheet Exhibit 14: Key Ratios

(Year-end March) FY17 FY18 FY19E FY20E (Year-end March) FY17 FY18 FY19E FY20E Liabilities Per Share Data Share Capital 51.3 51.3 51.3 51.3 EPS (Fully Diluted) 8.2 9.8 7.3 10.3 Reserves & Surplus 1,520.9 1,755.4 1,924.8 2,164.2 Cash EPS 10.3 12.8 10.7 14.6 Total Shareholders funds 1,572.2 1,806.7 1,976.1 2,215.5 BV 61.3 70.4 77.0 86.4 Secured Loan 147.3 128.6 500.0 750.0 Dividend per share 0.8 0.9 0.7 0.9 Unsecured Loan - - - - Operating Ratios Total Debt 147.3 128.6 500.0 750.0 EBITDA / Net Sales 13.2 17.2 13.5 13.5 Deferred Tax Liability - - - - PAT / Net Sales 9.1 13.5 6.9 6.7 Liability side total 1,719.5 1,935.1 2,476.1 2,965.4 Inventory Days 33 35 35.0 35.0 Debtor Days 137 136 136.0 135.0 Assets Creditor Days 52 91 91.0 91.0 Gross Block 442.4 570.5 795.5 845.5 Return Ratios Net Block 345.9 404.8 542.3 482.4 RoE 9.7 13.9 9.4 11.9 Capital WIP 7.8 11.1 11.1 11.1 RoCE 13.2 13.7 11.5 14.2 Non-current Investments 728.5 793.4 1,018.4 1,243.4 RoIC 10.0 13.6 11.5 14.3 Current Assets Valuation Ratios Inventories 153.5 175.8 258.6 375.1 EV / EBITDA 18.1 12.2 11.9 8.8 Sundry Debtors 630.9 690.0 1,004.9 1,446.6 P/E 18.6 15.5 20.9 14.8 Loans and Advances 364.2 412.7 591.1 857.3 EV / Net Sales 2.4 2.1 1.6 1.2 Other Current Assets 125.4 149.7 214.3 310.8 Market Cap / Sales 2.3 2.1 1.4 1.0 Cash 35.5 147.3 70.2 30.4 Price to Book Value 2.5 2.2 2.0 1.8 Total Current Assets 1,309.5 1,575.4 2,139.1 3,020.1 Turnover Ratios Creditors 236.9 462.8 672.3 975.1 Asset turnover 1.0 1.0 1.1 1.3 Provisions 24.1 17.6 25.5 37.0 Gross Block Turnover 3.8 3.2 3.4 4.6 Other Current Liabilities 249.2 205.6 298.7 433.1 Solvency Ratios Other Long Term Liabilities 164.0 165.2 239.9 348.0 Debt / Equity 0.1 0.1 0.3 0.3 Total Current Liabilities 674.2 851.2 1,236.4 1,793.1 Current Ratio 1.9 1.7 1.7 1.7 Net Current Assets 635.3 724.3 902.7 1,227.0 Debt / EBITDA 0.7 0.4 1.4 1.4 Assets side total 1,719.5 1,935.2 2,476.1 2,965.5 Quick Ratio 1.7 1.5 1.5 1.5 Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 9 ICICI Direct Research Universe (Construction & Infrastructure) CMP M Cap EPS (|) P/E (x) EV/EBITDA (x) P/B (x) RoE (%) Sector / Company (|)TP(|) Rating (| Cr)FY17 FY18E FY19EFY17 FY18E FY19EFY17 FY18E FY19E FY17 FY18E FY19EFY17 FY18E FY19E IRB Infra (IRBINF) 208230 Hold 7,281 19.121.527.710.99.77.51.31.21.21.41.31.113.213.615.2 PNC Infratech (PNCINF) 168215 Buy 4,3108.29.87.220.617.223.220.013.612.82.72.42.29.713.99.4 Sadbhav Engg. (SADENG) 271430 Buy 4,655 10.912.917.124.821.115.817.314.712.02.82.52.211.311.813.8 Ashoka Buildcon (ASHBUI) 146195 Buy 2,749 -7.9-4.2 0.9 NANA 191.79.68.17.29.914.713.6 NMNM 7.1 Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 10 RATING RATIONALE ICICI Direct Research endeavours to provide objective opinions and recommendations. ICICI Direct Research assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock.

Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more;

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093 [email protected]

ICICI Securities Ltd | Retail Equity Research Page 11 ANALYST CERTIFICATION We /I, Deepak Purswani, CFA MBA (Finance), Harsh Pathak, MBA (Finance) ; Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research 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. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration Number – INH000000990. ICICI Securities Limited Sebi Registration is INZ000183631 for stock broker. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is ’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.

It is confirmed that Deepak Purswani, CFA MBA (Finance), Harsh Pathak, MBA (Finance); Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Deepak Purswani, CFA MBA (Finance), Harsh Pathak, MBA (Finance); Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

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