NCC Ltd. share price target

While NCC Ltd. (NCC) disappointed on execution, APAT beat was largely on account of higher other income. On the balance sheet front, standalone gross debt is stable at Rs 15.8bn (-Rs 4.6bn QoQ), and net D/E stood at 0.42x. Debtors decreased to 74 days vs. 76 days in 3QFY17. The FY17 standalone order inflow stood at Rs 92.3bn, ex-L1 orders of Rs 20bn.

EBITDA margins fell 38 bps YoY to 8.1% (our estimate: 8.8%) due to higher construction expenses (11.8% in Q4FY17 vs. 10% in Q4FY16) Reported PAT de-grew 26.1% YoY to | 63.7 crore. However, it included an exceptional loss of | 47.3 crore relating to provision for loans and warranties. Adjusting for this, bottomline grew 28.8% YoY to | 111.1 crore. It was higher than our expectation of | 72.5 crore despite a topline miss, on account of higher than expected other income (| 47.1 crore in Q4FY17 vs. our expectation of | 25.0 crore)...

NCC's reported performance has come in below the expectation as dismal revenue booking and higher exceptional items dragged earnings. Further, a lower than estimated order inflow aggravated the concern. Its top-line de-grew by 13% YoY to Rs21.4bn (vs. our expectation of Rs23bn), mainly owing to revenue loss in its electrical division in UP due to assembly elections. While EBITDA declined by 17% YoY (flat on sequential comparison) to Rs1.74bn, EBITDA margin came in at 8.1% (-38 bps YoY and -101 bps). Finance cost declined by 22% YoY to Rs1.02bn led by a significant reduction in gross debt. However, exceptional item of Rs500mn pertaining to liquidated damage (DLD) for Nellore power project dragged its PBT to Rs440mn (-59% YoY...

Recently, India Ratings & Research (Ind-Ra) has upgraded NCC's long term issuer rating to IND A- from IND BBB+ and maintained a stable outlook. Going forward, this should help the company reduce the cost of borrowing leading to interest cost savings, which could improve its profitability. The blended borrowing cost for NCC as of Q3FY17 was at ~11.3% vs. 11.8% in Q2FY17. Also, the company expects to bring down its debt to ~| 1900 crore by FY17 end from | 2042.7 crore in Q3FY17 with improvement in working capital and money to be received from its...

Revenue decreased by 2.26% to Rs. 1903.48 Cr in Q3FY17 when compared to the previous quarter. Also, it decreased by 7.27% when compared with Q3FY16.

NCC Ltd. (NCC) delivered APAT beat largely on account of an Rs 193mn reduction in YoY interest costs. On the balance sheet front, gross debt is stable at Rs 20.6bn (-Rs 173mn QoQ) and net D/E stood at 0.55x. Debtors increased to 76 days vs. 70 days in 2QFY17. 9MFY17 standalone order inflow stood at Rs 62.6bn ex-L1/subsidiary orders of Rs 30/30.5bn.

ICICI Securities Ltd | Retail Equity Research NCC's topline de-grew 7.3% YoY to | 1903.7 crore (our estimate: | 2182.0 crore) owing to muted execution in the electrical division post some payment delays from the clients...

ICICI Securities Ltd | Retail Equity Research NCC's topline de-grew 7.1% YoY to | 1947.9 crore (our estimate: | 2142.8 crore) owing to muted execution following heavy monsoons EBITDA margins remained flat YoY at 8.8% (our estimate of 8.7%) PAT de-grew at 7.1% YoY to | 51.1 crore (our estimate: | 62.4 crore) due to topline miss & higher-than-expected effective tax rate (30.9% in Q2FY17 vs. our estimate of 28.0%). PAT also included an exceptional gain of | 4.8 crore related to net interest income (after adjusting for...

The order book as on June 30, 2016 was at Rs 19,045 Cr with strong order inflows of Rs 3,620 Cr in Q1FY17. Furthermore, the management is eyeing a good amount of opportunities from the Telangana government in the irrigation segment. It is also expecting some building contracts from Andhra Pradesh. Going ahead, the management has given order inflow guidance of ~Rs 12,500 Cr for FY17E. It is looking to get significant orders from the road space and is keen on bidding for EPC and HAM projects.

ICICI Securities Ltd | Retail Equity Research NCC's topline grew 10.4% YoY to | 1901.1 crore mainly on account of better execution. It was in line with our estimate of | 1898.9 crore...