NBCC (India) Ltd. share price target

We expect revenue and PAT to grow at CAGR of 13.1% and 16% respectivelyduring FY14 to FY17E. RoE and RoCE are expected to expand by about 2%by FY17E as compared to FY15. Government initiatives for development ofinfrastructure projects to boost Indian economy offer further prospects of increase in the company's order book and sales. Huge scope of business in GCC countries in association with overseas partners/agencies.

NBCC has moved up significantly since our initial Stock Idea on July 28, 2014 at Rs 465 and reached the target of Rs 750. Now we see further upside in the stock and maintain our BUY rating and raise our target to Rs 1355. NBCC is a debt free company with a strong Order Book which is expected to grow from the current ~Rs 20000 cr to ~Rs 40000 cr by FY17E. The company appears to be set to enter a period very strong growth. With the new Government's focus on the housing sector, along with a strong probability of the company getting the land banks of sick PSUs prior to their sell-off, we believe the Real Estate segment is likely to grow dramatically....

Lean and clean business model: NBCC occupies a unique position as being one of the most efficient PSUs with a lean business model that has enabled it ensure scalability without adding on the burden of debt. Backed by a large and rising Order Book, there is ample revenue visibility going forward for at least 4 years. Subcontracting majority of the work helps it remain asset light. In its PMC business, NBCC collects significant amount of its payment upfront, thereby maintaining a...