Pick these infra plays for up to 39% gains: ICICI Securities


ICICI Securities has come out with research coverage on two infrastructure companies with targets of up to 39% gains. The brokerage suggests these undervalued infra stocks primarily on the back of attractive valuations and decent growth opportunities.

First off, PNC Infratech (NSE:PNCINFRA) is where ICICI Direct sees high gains of up to 39% in the next 12-18 months. The brokerage firm has guided a target of INR345 per share for the EPC player against the current price of INR248 while initiating coverage. The mid-cap company is expected to among the major beneficiaries of the government’s focus on roads and water supply programmes including Jal Jeevan Mission.

“Strong order book position, receipt of appointed date in most of its projects, and execution pick-up to translate into 13.4% topline CAGR over FY22-24E and stable margins. The company has also planned monetization of HAM/Annuity assets, and it has booked Rs. 90.3 crore towards impairment of Ghaziabad Aligarh Expressway Pvt Ltd (associate company),” said the brokerage firm in its note.

The stock currently trades at a PE ratio of 11.2 while its Price to Sales ratio is at 0.90, indicating undervaluation, although its debt levels are slightly high at 1.32. Despite a good show with order inflows, the stock hasn’t moved much and is actually down 2.5% over the last year, further helping its valuations metrics. The brokerage house’s coverage and PNC Infratech’s proven execution capabilities are likely to make the stock a winner over the next 12 months.

Undervalued infra stocks – GR Infra

Also included in the list of undervalued infra stocks is GR Infraprojects (NSE:GRINFRA). Here the brokerage firm has set a target of INR1,780 per share over the next 12 – 18 months, indicating an upside of 23% from the current level of INR1,442 per share.

The road developer has delivered 30.3% revenue CAGR during FY16-21, noted research analyst Bhupendra Tiwary and Lokesh Kashikar in their note. Furthermore, the road EPC player has got diversification plans on the cards. GR Infra is specifically targeting projects in railways, metros and power transmission business. Overall, it is aiming at 15-20% revenue contribution from non-roads segment over the medium-to-longer term.

These undervalued infra stocks offer meaningful upside as the sector is also getting required government support and policy tailwinds.


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