NBCC (India) Ltd. share price target

Net sales grew 14.3% YoY to | 1245.2 crore driven by growth in PMC division (grew 20.7% YoY to | 1171.1 crore). However, sales was below our estimate of | 1363.0 crore mainly on account of lower than expected revenues in PMC division (| 1171.1 crore in Q1FY17 vs. our expectation of | 1259.5 crore) and real estate division (| 17.3 crore in Q1FY17 vs. our expectation of | 51.8 crore) • The EBITDA margin contracted 40 bps YoY to 3.5% and was below our estimate of 4.5% mainly due to higher un-allocable expenses (| 21.0 crore in Q1FY17 vs. our expectation of | 12.6 crore) • PAT grew 14.4% YoY to | 45.4 crore. However, it was below our expectation of | 59.4 crore mainly on account of higher effective tax rate (34.5% in Q1FY17 vs. 30.3% in Q1FY16) and EBITDA margin miss.

They are positive on NBCC’s business model given the huge set of opportunities, going ahead and expect its revenues/earnings to grow at of 34.4%/27.5% CAGR over FY16-FY18E. We also like NBCC given its negative working capital, cash rich balance sheet (| 1133.5 crore as on FY16) and strong return ratios (RoE of 26.3% & RoCE of 40.7% in FY18E), going ahead. Consequently,they maintain BUY recommendation with revised SOTP based target price of | 281 (implying 33.5x FY18E EPS).

Aided by robust order backlog, the top-line of NBCC (India) Ltd. grew by ~14% yoy to Rs12.5bn in 1QFY17, lower than our estimates of Rs13.0bn mainly owing to subdued performance of real estate division. PMC which contributes 94% to its top-line grew by 21% yoy supported by healthy PMC orders in its order book. EBITDA declined by ~17% yoy to Rs259mn and consequent EBITDA margins came in at mere 2.1%, (-77bps yoy and -313bps qoq), while net profit grew by ~15% yoy to Rs454mn. As per its Management, operating margins would improve in coming quarters with the beginning of revenue booking from new re-development projects and pick-up in execution from new...

National Building Construction Corporation (NBCC) reported a strong 38.8% yoy increase in revenue for 4QFY2016 to Rs2,251cr, which is above our estimate of Rs2,130cr. Revenue growth during the quarter was on account of 45.6% yoy increase in the PMC segment revenue to Rs2,068cr. The segment accounted for 92% of the company's 4QFY2016 reven..

The EBITDA margin contracted 140 bps YoY to 7.8%. There were employee benefit expenses on account of post retirement medical benefits on an actuarial basis aggregating | 3.4 crore. Adjusting for...

National Buildings Construction Corporation (NBCC) has reported a healthy topline growth (+26% yoy) at Rs22.4bn in 4QFY16 ahead of our estimates mainly supported by healthy order book and execution ramp-up. PMC, which forms 92% of topline, grew by 45% yoy, while EBITDA declined by ~16% yoy to Rs1.16bn below our estimate of Rs1.45bn. Higher other expenditures (+156% yoy) due to provisioning of Rs150mn towards contractors' receivable and Rs35mn of additional cost for post retirement medical benefit were the prime reasons for lower operating performance. Notably, NBCC has withdrawn its fund-raising plan via FPO on the grounds that...

NBCC's topline grew 29.0% YoY to | 1421.1 crore and was slightly above our estimate of | 1359.2 crore. Revenues were boosted by PMC division, which grew robustly at 27.2% YoY to | 1239.9 crore...

NBCC reported a healthy topline growth (+29% yoy) on the back of robust order book. Real Estate segment continued to witness strong growth (+62% yoy) to Rs1.10bn. However, operating performance remains an overhang as EBITDA margins came in at 4% (-118 bps qoq) below the estimate mainly on account of increase in consultancy expenses. Notably, NBCC maintains its view to add healthy orders (9MFY16 order inflow stood at Rs170bn) going ahead and hence, over 25% growth in ensuing years. We view NBCC as a robust growth story in the backdrop of its PWO status and niche presence in re-development of government's old colonies...

NBCC reported a healthy topline growth (+29% yoy) on the back of robust order book. Real Estate segment continued to witness strong growth (+62% yoy) to Rs1.10bn. However, operating performance remains an overhang as EBITDA margins came in at 4% (-118 bps qoq) below the estimate mainly on account of increase in consultancy expenses. Notably, NBCC maintains its view to add healthy orders (9MFY16 order inflow stood at Rs170bn) going ahead and hence, over 25% growth in ensuing years. We view NBCC as a robust growth story in the backdrop of its PWO status and niche presence in re-development of government's old colonies...

National Building Construction Corporation (NBCC) a Navratna company, is one of the largest Public Sector Enterprises (PSEs) in the construction space. Its Project Management Contract (PMC) division (~85% of FY2015 revenues) is a cash cow business, which gets large orders on nomination basis and enjoys a negative working capital cycle. Huge opportunities in the pipeline NBCC reported an order book of Rs30,000cr as of 2QFY2016-end, reflecting 5.8x last twelve month (LTM) revenues. Of the Rs30,000cr order book, the PMC segment accounted for a major 92% (includes ~Rs3,500cr Kidwainagar redevelopment project), whereas the remaining is from Real Estate (5%) and EPC (3%) segments. Considering the emerging bid pipeline for re-development works from Delhi and other State governments, and with Smart City projects to take-off shortly, we expect NBCC order book to grow 2-fold during 1HFY2016-18E to Rs59,440cr. Revenues and PAT to report 26.7% & 32.7% CAGR during FY2015-18E We expect NBCC to report a 26.7% revenue CAGR during FY2015-18E (to Rs9,506cr), mainly driven by an estimated 29.3% revenue CAGR from the PMC segment, where re-development projects would contribute the maximum. We expect NBCC to report 41.5% EBITDA CAGR during the same period, led by increased contribution from the PMC segment, which...