NCC Ltd. share price target

NCC Limited (NCC) is one of the largest well diversified construction companies in India with a foothold in every segment of construction sector. Q2FY22 revenue grew by 43% YoY (better than estimate) as construction back to normalcy and sites are operating at precovid levels. However, EBITDA margin declined by 286bps YoY to 10.8% due to higher commodity prices and higher sub-contracting expenses (45% YoY). Order book remain healthy at Rs39,112cr (4.5x TTM revenue) supported by a strong inflow of Rs5,611cr in H1FY22....

Well-diversified order backlog, robust execution capabilities, proficient management and strong focus on debt reduction and working capital are expected to outline NCC over the next few years Q2FY22 Results: NCC's Q2FY22 performance was on expected lines - strong...

NCC Limited (NCC) is one of the largest well diversified construction companies in India with a foothold in every segment of construction sector. Q4FY21 revenue grew by 20% YoY led by ramp up in execution on account of better availability of workforce. EBITDA margin declined by 179bps YoY to 11.1% due to higher input costs and higher sub-contracting expenses (54% YoY). Order book remain healthy at Rs37,911cr (5.2x FY21 revenue) supported by strong inflow of Rs18,953 in FY21. As per company, the second wave of Covid is expected to impact...

NCC reported a decent set of numbers in Q4FY21 with revenue growth of 20% YoY to | 2617.7 crore on a standalone basis. The topline growth was mainly driven by strong order book position and pick-up in execution. However, operating margin declined 179 bps YoY to 11.1% owing to higher sub-contracting expenses. Consequently, operating profit improved merely 3.3% YoY to | 289.7 crore. At the net level, a decent operating performance coupled with benign depreciation and interest cost has translated into 11.4%...

impacted at 10-15% below pre-covid levels in Apr-May'21. NCC reported strong quarterly numbers as revenues came in above our and street estimates owing to ramp in execution across its project sites. However, Liquidity position continues to remain robust on the back of reduced debt (Rs1.2bn in FY21), lower rate Covid loans and reduced performance BG requirements. Management expects the working capital levels to ease further as group companies' exposure is expected to reduce in FY22 (Rs1.6bn reduction in FY21) and receivable from AP Govt. for stalled projects (Rs1.2bn...

Strong inflows boost order book; execution set to pick up NCC's order book at the end of Q3FY21 was strong at | 39,182 crore (book to TTM bill ratio: 5.7x) mainly backed by healthy order inflows of ~| 20000 crore secured during 9MFY21 (and | 1200 crore, thereafter in January, 2021). Going forward, the management has indicated towards strong momentum in different infrastructure verticals and has guided for ~| 2,000 crore of order inflows in the remaining period of FY21. On the execution front, NCC has witnessed QoQ improvement in the topline performance over the past few...

Rs77bn) with blended EBITDAM in the range of 12%. NCC reported weak quarterly numbers as revenues came below our and street estimates due to tepid execution levels. However, rigid cost control disbursements from Central and State Govt. authorities and easing of finance cost burden (down 25% YoY) with lower interest rates and reduced performance BG requirements. Due to lower than anticipated 9M execution levels, management reduced FY21 revenue guidance to Rs71-72bn (earlier Rs77bn) but maintained strong optimism going ahead led by strong order...

Q2FY21 revenue declined by 11% YoY (better than estimate) as monsoon & labour availability impacted execution. EBITDA margin improved by 16bps YoY to 13.6% due to cost control measures and better product mix. Order book remain healthy at Rs29,360cr (4.2x TTM revenue)...

Labour migration and supply chain disruption has largely impacted NCC's performance during H1FY21. Going ahead, we expect a gradual recovery from H2FY21 with key solace being controlled debt levels. We note that NCC is currently trading at 6.2x FY22E P/E. However, we would turn constructive only when we witness an improvement in working capital. We assign HOLD...