HDFC Securities' research report on NCC
NCC Ltd. (NCC) delivered a strong 2QFY19 financial performance with net profit beat of 98% largely driven by EBIDTA margins expansion of 220bps YoY to 11.8%. Execution was 29% above estimate at Rs 31bn, despite the monsoon quarter generally being seasonally weak. Net debt has decreased from Rs 17.1bn to Rs 15.6bn (QoQ, Rs 1.4bn reduction) resulting in net D/E reducing to 0.4x vs 0.35x QoQ. NCC has guided for FY19E gross debt of Rs 17bn vs Rs 13bn in FY18. Order inflow for 2QFY19 stood at Rs 41.8bn. Order backlog is Rs 329.5bn. This order book contains a large portion of ‘fast track’ orders to be executed over the next 18 months.
Outlook
Consolidated results are mirroring standalone profits as international losses are over. NCC is not bidding internationally. Maintain BUY with increased Rs 168/sh TP.
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