Buy NCC; target of Rs 47: Dolat Capital Market

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Dolat Capital Market's research report on NCC

NCC posted 11.0%/ 10.0%/ 27.0% YoY de-growth in Revenue/ EBITDA/ PAT to Rs15.4 bn/ Rs2.1 bn/ Rs584 mn due to muted execution due to covid-19 lockdown. After adjusting Rs501 mn (Q2FY20), APAT increased 94.9% YoY to Rs584 mn. We increase our revenue estimates by 10.7%/ 4.5% and EBITDA margin by 73/ 56 bps for FY21E/ FY22E considering H1FY21 results and order inflows as on date. Accordingly, we increase our APAT estimates by 68.1%/ 27.7% for FY21E/ FY22E and we introduce FY23E. NCC is likely to post -6.9%/ 12.5%/ 11.3% revenue growth in FY21E/ FY22E/ FY23E. We factor increase in WC (% of revenue) to 63.0% (FY21E)/ 56.2% (FY22E)/ 54.3% (FY23E) from 52.7% (FY20) and minor reduction in debt to Rs18.4 bn (FY21E)/ Rs18 bn (FY22E)/ Rs17.8 bn (FY23E) from Rs19.1 bn/ Rs20 bn (FY20/ H1FY21).

Outlook

We expect revenue/ APAT CAGR of 5.3%/ 15.2% over FY20-23E. Considering improvement in labour availability and execution levels, we expect NCC to report healthy revenue and PAT growth from Q3FY21E and the pace of which will increase in FY22E. Considering, strong orderbook and order inflows gaining traction, we upgrade to Buy with TP of Rs47 (8x Sep’22E EPS).

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Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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