Buy NCC; target of Rs 137: HDFC Securities

HDFC Securities' research report on NCC

NCC’s Q4FY23 revenue/EBITDA/APAT came in at INR 40.2/4.2/1.8bn, beating our estimates on all fronts by 11.2/13.7/9.7%. With an inflow of INR 132.8bn in Q4FY23, the FY23 order inflow (OI) stood at INR 259bn (its highest ever annual inflow), taking the order book (OB) as of Mar’23 to an all-time high of INR 502.4bn (~3.8x FY23 revenue). The company guided for (1) debt reduction by another INR 2bn by FY24-end and (2) incurring a capex of INR 2.8bn. The OB for the AP project stands at INR 31.3bn. With the conclusion of the Sembcorp arbitration case, the company is expecting the pay out in H2FY24. It guided for FY24 revenue to grow by 20% YoY with an EBITDA margin of 10-10.15% and an OI of INR 260bn.

Outlook

Given the robust order book, pick-up in execution, and robust balance sheet, we recalibrate our FY24/25E EPS by -3.6/4.9%. We maintain BUY on NCC, with an increased TP of INR 137 (9x Mar-25E EPS).

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