Buy NBCC; target of Rs 318: Emkay Global

Emkay Global is bullish on NBCC has recommended buy rating on the stock with a target price of Rs 318 in its research report dated January 17, 2018.

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January 24, 2018 / 11:51 IST

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Emkay Global's research report on NBCC

NBCC (India) Ltd (NBCC) is one of fastest and largest growing Central Public Sector Enterprises (CPSE), which has built a niche business model, backed by stellar credentials, vast client base and exemplary execution track record. The company’s unique business model is underpinned by negative working capital cycle and robust return ratios (2 5 %+). NBCC’s stellar credentials and vast expertise have grabbed the government’s attention and its PWO status has helped it to win various prestigious projects over the years. We believe that NBCC will report strong revenue/PAT CAGR of ~29%/30 % over FY1 8 - FY20E, led by a healthy order book of ~Rs750bn, primarily driven by the PMC business. In our view, armed with a robust balance sheet, healthy cash flow generation and limited capex, NBCC is expected to report return ratios of 28%/31% in FY19E/FY20E.

Outlook

We have assigned a premium multiple to NBCC, valuing it at 40x on its FY20E EPS of Rs7.9, arriving at a TP of Rs318. We initiate coverage with a BUY rating on the stock.

For all recommendations report, click here