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Thread: NCC Ltd (NSE:NCC) (BSE:500294)

  1. #1
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    NCC Ltd (NSE:NCC) (BSE:500294)

    NCC Limited is an India-based company. The Company is engaged in the infrastructure sector, primarily in the construction of industrial and commercial buildings, roads, bridges and flyovers, water supply and environment projects, housing, power transmission lines, irrigation and hydrothermal power projects and real estate development. The Company has international offices in Dubai and Muscat. The Company’s subsidiaries operate in infrastructure development, real estate and urban infrastructure development and power. The Company’s subsidiaries include NCC Infrastructure Holdings Limited, NCC Urban Infrastructure Limited, NCC Power Projects (Sompeta) Private Limited, NCC International Convention Centre Limited, NCC Oil & Gas Limited and Vaidehi Avenues Limited.

    Official Website: www.ncclimited.com

  2. #2
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    For 1QFY2016, NCC reported a favorable standalone earnings performance, reflecting better execution, improvement in margins and lower yoy interest expenses owing to decline in debt. On the top-line front, NCC (standalone) reported a 15.6% yoy growth to Rs1,723cr. On sequential basis top-line declined 22.1%. Stronger execution across Water, Environment & Railways (WER), and Buildings and Roads (B&R) segments and sale of land parcel at Hyderabad (worth Rs24.6cr), contributed to higher 1QFY2016 revenues. NCC reported an 188bp yoy EBITDA margin improvement to 9.2%, owing to 13.3% yoy decline in other expenses. Expansion in EBITDA margin on yoy basis coupled with lower yoy interest expenses led to PAT coming in at Rs41cr for the quarter as against a loss of Rs3cr in 1QFY2015. NCC’s outstanding order book as of 1QFY2016 stands at Rs18,727cr (2.2x LTM revenues, inc. International business), indicating a 5.7% yoy decline. Outlook and valuation: NCC’s stock price has run-up by 89.3% in the last 12 months, mainly owing to the balance sheet de-leveraging exercise pursued by the company. NCC aims to repay debt by around Rs200-300cr through proceeds of stake sale. However stretched working capital cycle will likely inhibit the company from cutting down its debt in FY2016. We are of the view that the next leg of re-rating in the stock would come from improvement in the EBITDA margin, and further compression in the working capital cycle. Since we estimate this to happen in FY2017 only, we assign 14.0x P/E multiple to the standalone EPC business, which in-turn has restricted the target price at Rs90/share. Given that all positives are captured in the current market price and potential upside is limited, we assign Accumulate rating on the stock.

    Source: http://www.angelbroking.com/
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