Buy NCC target of Rs 57: Anand Rathi

Anand Rathi 's research report on NCC

For NCC, the Covid-19-induced disruption has come as a setback in its efforts to recover from the issues it faced with its AP exposure. Though revenue guidance was missed because of Covid-19, not all was bad as healthy Q4 inflows turned revenue assurance better, and the meaningfully de-levered balance sheet renders it future-ready for any revival in economic activity. We see NCC’s multi-sector execution capabilities to come to its rescue in the immediate future, and set the stage for it to emerge as one of the beneficiaries of the unaltered long-term growth prospects. Valuations, too, have turned appealing, after the recent steep fall, and prod us to change our long-held cautious stance. Consequently, we raise our recommendation to a Buy.

Outlook

Adjusting for the Covid-impact, we slash FY21e earnings ~48% (and ~0.2% for FY22). At the CMP, the stock (excl. investments) quotes at EV/EBITDA of 2.6x FY22e, against the TP implied 4x.

NCC 01062020-anand

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