Accumulate NCC; target of Rs 41: P Lilladher

Prabhudas Lilladher's research report on NCC

"On a standalone basis, NCC, in Q4FY13, reported a top-line of Rs16.8bn, posting de-growth of 4.3 percent YoY and was below our expectations. For FY13, sales growth stood at 7.8 percent YoY. On a consolidated basis too, in Q4FY13, revenues de-grew by 4.2 percent YoY. However, for FY13, sales growth was modest at 3.5 percent YoY.

Adj. EBITDA margin improves, aids PAT: EBITDA margins adjusting to write-offs (to the tune of Rs400m) stood at 8 percent which improved by 222bps YoY in Q4FY13. For FY13, margins were at 7.9 percent, up 40bps YoY. However, debt levels at Rs22bn came down by Rs3bn QoQ. Interest cost was, thus, higher by 6 percent for FY13. The company reported sale of real estate to the tune of Rs630m and was booked in OOI. Thus, for Q4FY13, NCC reported a profit of Rs258m; this was below our expectation of PAT of Rs358m. On a consolidated basis, PAT stood at Rs123m.

Updates: The current order book stands at Rs186bn and order inflow for FY13 stood at Rs48bn. NCC reversed an order of Rs8bn (third party) in the power segment as the project is stalled. The company is further expecting Rs550m from real estate sale and is in the advanced stages to sell its BOT road project (Western UP Toll ways). NCC is planning to bring down debt by Rs3bn in FY14E. Consolidated debt stood at Rs39bn.

Outlook cautious: Some re-rating could be on cards on account of stake sale in SPVs, coupled with improved execution. At CMP, the stock is trading at a core P/E of 4.3x FY15E.Maintain 'Accumulate' on the stock," says Prabhudas Lilladher research report.

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