Buy NCC; target of Rs 120: Geojit

Geojit's research report on NCC

NCC Limited (NCC) is one of the largest well diversified construction companies in India with a foothold in every segment of construction sector. Q3FY21 revenue declined by 9.4% YoY due to muted execution & impact of labour availability. EBITDA margin improved by 67bps YoY to 12.5% due to fall in employee cost and other expenses. Order book remain healthy at Rs39,182cr (5.7x TTM revenue) supported by strong inflow of Rs190bn in 9MFY21 and NCC expect Rs2,000cr of fresh orders in Q4FY21. Adj. PAT declined by 47% YoY due to lower volume of turnover and higher tax rate of 38%. NCC expect work efficiency will back to normalcy in the coming quarters and guided for Rs7,200cr of revenue (vs earlier Rs7,700cr) FY21E.

Outlook

We maintain Buy rating due to strong order book and cheap valuation with a TP of Rs120, based on a P/E of 15x on FY23E earnings.

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