Stocks to buy: PNC Infratech, NCC among top infrastructure stock picks by Phillip Capital

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Also Read: Stocks to buy: Hindustan Aeronautics, Bharat Dynamics among top defence stock picks by Choice Broking “We believe the sector should be looked as stock specific now considering runup in some stocks as well as growth concern in some stocks due to book to bill below 2.2x. We maintain PNC Infratech as our top pick, followed by HG Infra Engineering and NCC. We see limited upside potential in GR Infraprojects, KNR Constructions and Ahluwalia Contracts (India)," Phillip Capital said.

Here are top infrastructure stocks to buy: PNC Infratech delivered a decent Q2 performance as its topline grew by 8% YoY with marginal weakness in execution. Orderbook is decent at 2.4x book-to-sales, while balance sheet got stretched a bit with net debt position of ₹2.6 billion, slightly neutralised by improved working capital. “However, the balance sheet is strong enough to fund the HAM equity requirement.

The management is hopeful of order inflow of c. ₹100 billion in FY24 and diversification should support growth going ahead and maintain 15% growth revenue guidance for FY24. Overall, PNC continues to smartly track the EPC evolution curve, diversifying its orderbook – water, canal & railway projects now forming 37% of the orderbook," Phillip Capital said.

The brokerage has a ‘Buy’ rating on the stock with a price target of ₹470 per share, implying an upside of 44% from Tuesday's closing price. (Exciting news! Mint is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) HG Infra Engineering delivered muted performance in Q2FY24 impacted by prolonged monsoons. Margins were down by 14 bps YoY at 15.9% but ahead of estimates of 15.3%.