Buy NCC; target of Rs 110: ICICI Direct

ICICI Direct's research report on NCC

NCC’s Q3FY21 performance was a mixed bag with strong order inflows but slower execution. Its standalone revenue in Q3FY21 fell 9.4% YoY to Rs 1,918.4 crore, largely impacted by slower-than-expected execution. However, various cost-cutting initiatives (despite rise in raw material/commodity prices) drove operating margin performance (up 67 bps YoY to 12.5%). At PAT level, muted topline performance coupled with higher tax outgo translated to 47.2% YoY fall in adjusted PAT to Rs 70.3 crore.

Outlook

We upgrade our rating from HOLD to BUY with a target price of Rs 110/share (6x FY22E EV/EBITDA) (vs. earlier target price of Rs 65/share).