Transportation share price target

Favourable election outcome and continuation of government policies augur well for the construction sector and after the elections a huge overhang has been lifted as we now await activity from the NHAI side. In the absence of private capex, government's continued thrust on infrastructure investment is one of the few engines left to push the GDP growth of the country. While FY19 was a weak year for road awards, various issues like availability of funding, burgeoning debt of NHAI and balance sheet strength of the construction companies cast shadow on whether this sector is poised for next level of growth or no? In this report, we have looked at whether NHAI has more room to fund investments in the...

Being a strong local player, PNC is well placed to capture a large share of the upcoming NHAI and UPEIDA tendering (incl. Bundelkhand, Gorakhpur Link and Ganga Expressways). PNC has guided for ~Rs 70-80bn inflows in FY20E (~50% in HAM). Asset monetization is on track with PNC awaiting NOC from NHAI and lenders (receipt is likely by Sep-19) for Aligarh Ghaziabad project stake sale to Cube Highways. Of the total order book of Rs 131bn only ~Rs 9bn is yet to move into execution. Balance sheet is robust with FY19-end standalone net D/E of <0.1x. Our estimates for PNC are ~25% higher than consensus as we believe the management is conservatively guiding the analyst community. We maintain BUY. Key risks (1) Slowdown in NHAI ordering; (2) Delay in UP state projects awards; (3) High raw material inflation. We maintain BUY on PNC with a SOTP based TP of Rs 339/sh. We have not made any major changes to our estimates

We expect Q4FY19 to be a mixed quarter for our logistics coverage. Industry interactions and key indicators suggest demand for logistics services remained soft in Q4 we thus expect a muted operating performance from traditional road transport and container rail players, though the consumer-focused 3PL and express segments are likely to do well. Amongst companies, AGLL/ TCIEXP are forecast to post a strong operating performance (23%/21% YoY),...

We believe the tide is turning for India's roads sector as (i) developers have begun receiving appointed dates for awarded projects (in place for 49% of our coverage contracts), implying steady revenue growth ahead; (ii) 91% of HAM projects for our coverage have financial closure; (iii) beneficial policy reforms continue to play out; and (iv) NHAI's bid pipeline looks robust at ~Rs 1tn pa over FY20-FY24E. We prefer asset-light companies and select asset-owners...

We believe the tide is turning for India's roads sector as (i) developers have begun receiving appointed dates for awarded projects (in place for 49% of our coverage contracts), implying steady revenue growth ahead; (ii) 91% of HAM projects for our coverage have financial closure; (iii) beneficial policy reforms continue to play out; and (iv) NHAI's bid pipeline looks robust at ~Rs 1tn pa over FY20-FY24E. We prefer asset-light companies and select asset-owners with sound financials...

Rail Vikas Nigam Limited IPO Note Issue Open: Mar 29 - Apr 03, 2019, Price Band: Rs. 17 19 (Rs 0.50 discount to Employees and Retail investors), Total Issue Size: 253,457,280 (Entirely Offer for sale by the President of India, acting through the ministry of railways, Government of India)

RVNL currently has an order backlog of | 77,500 crore. The management says ~| 30,000 crore worth orders are long gestation projects with execution timeline at five to seven years. Orders of ~| 45,000 crore are related to doubling, new lines, etc, where execution timelines are two to...

Broad based pain, NIFTY/Sensex saved by a select few DII Inflows down 44% YTD, FII flows key to NIFTY returns in 2019 Low inflation positive, 30% jump in Brent prices and weak capex a drag Soft Crude enables lowest trade balance since Feb2018 Interest rates: Repo cut by 25bps, liquidity to impact growth in near term GST: Target revised in interim budget, benefits slow to accrue Rural/Agriculture under pressure due to local and global factors 3QFY19: Banks, Gas players Shine; Auto, NBFC under pressure...

Broad based pain, NIFTY/Sensex saved by a select few DII Inflows down 44% YTD, FII flows key to NIFTY returns in 2019 Low inflation positive, 30% jump in Brent prices and weak capex a drag Soft Crude enables lowest trade balance since Feb2018 Interest rates: Repo cut by 25bps, liquidity to impact growth in near term GST: Target revised in interim budget, benefits slow to accrue Rural/Agriculture under pressure due to local and global factors 3QFY19: Banks, Gas players Shine; Auto, NBFC under pressure...

Price target change, Top Picks: Post adjusting for higher diesel/bitumen/interest costs we have cut our EPS estimates by 5-26% for coverage universe. We have standardized our valuation methodology from EV/EBIDTA to P/E based to factor in debt/interest volatility. Top Picks: PNC, KNR, NCC. Top Picks Buildings: JMC Projects, Ahluwalia. After a muted 1HFY19 ordering, tendering to pick up from Nov-18: NHAI awarded ~7,400km/Rs 1.2tn of projects in FY18 and we expect Rs 700bn of awards during FY19E with a ~4,350km target. 1HFY19E ordering has been muted after a strong 4QFY18. NHAI tenders worth Rs 660bn are up for tendering during 3QFY19E.