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Last Updated : Nov 06, 2019 01:45 PM IST | Source: Moneycontrol.com

Buy NCC; target of Rs 76: Dolat Capital

Dolat Capital is bullish on NCC has recommended buy rating on the stock with a target price of Rs 76 in its research report dated November 05, 2019.

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Dolat Capital's research report on NCC


NCC reported lower than expected numbers on all fronts. NCC posted weak set of numbers with 44.2%/ 36.2%/ 82.7% YoY de-growth in Revenue/ EBITDA/ APAT to `17.3 bn/ `2.3 bn/ `300 mn due to lower execution coupled with higher depreciation + interest cost and lower other income. Core EBITDA margins (adjusting for `310 mn claim on Mumbai projects). We sharply reduce our revenue estimates by 21%/ 18.1% for FY20E/ FY21E factoring 28.2% de-growth in 1HFY20, reduced order inflow for FY20E and lower execution rate. NCC is likely to post -20.9%/ 18.7% revenue growth in FY20E/ FY21E. We maintain core EBITDA margin estimates of 11.7%/ 11.7% for FY20E/ FY21E. Accordingly, we reduce our Adj. PAT estimates by 45.1%/ 31.8% for FY20E/ FY21E primarily due to reduction in execution and higher tax rate of 33% vs. 25.6% for FY20E.


Outlook


We expect recovery in FY21E with 18.7%/ 59.8% growth in revenue/ Adj. PAT. Considering ~50% correction in stock price during YTDFY20 and recovery in FY21E, we maintain BUY with downward TP of `76 (9x FY21E EPS).


For all recommendations report, click here


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First Published on Nov 6, 2019 01:45 pm
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