Feb 12, 2013, 12.38 PM IST | Source: Moneycontrol.com

Accumulate NCC; target of Rs 46: PLilladher

Prabhudas Lilladher is bullish on NCC and has recommended accumulate rating on the stock with a target of Rs 46 in its February 08, 2013 research report.

Prabhudas Lilladher is bullish on NCC and has recommended accumulate rating on the stock with a target of Rs 46 in its February 08, 2013 research report.
“NCC, in Q3FY13, has reported a top-line of Rs11.8bn, posting de-growth of 6.4% YoY and was below our expectations. The work was affected (to the tune of Rs2bn) on account of a delay from the client side. On a consolidated basis too, revenues were flat YoY and stood at Rs15.2bn, down QoQ on account of low performance from subsidiaries.”
“EBITDA margins also cooled off QoQ at 7.2%, decreased by 100bps YoY and QoQ was higher by 100bps. On a consolidated basis, EBITDA margins stood at 11.5%, up 60bps YoY and flat QoQ. Margins were impacted on account of lower execution and slippages in projects. However, debt levels at Rs25bn came down by Rs1bn QoQ. Interest was, thus, lower QoQ by Rs30m. The company reported sale of real estate to the tune of Rs140m and was booked in OI. Thus, for Q3FY13, NCC reported a net loss of Rs12m; this was below our expectation of PAT of Rs142m. On a consolidated basis, it just managed to break-even at net level. NCC has maintained guidance of 15% revenue growth YoY in FY13E; however, we have taken it at 10%. The current order book stands at Rs188bn and order inflow for 9MFY13 stood at Rs32bn. Himachal Sorang HEP stake sale is now delayed and will take at least 6-8 months to go through. The company is further expecting Rs550m from real estate sale.”
“Despite stake sale news, the stock has come down (below our target price) drastically by 30% in the last one month when we had a .Reduce. on the stock (Jan 7 CMP Rs59, TP Rs50). Now the negatives are more or less factored in. Some re-rating in terms of positive news for the Infrastructure sector in the Budget can provide the required momentum. Thus, we upgrade the stock from ‘Reduce. to .Accumulate.. We have lowered our FY14E estimates and consequently, the TP on the back of poor execution. At CMP, the stock is trading at a core P/E of 6x FY15E,” says Prabhudas Lilladher research report.

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