Buy NCC; target of Rs 83: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on NCC

NCC posted decent set of numbers in a stressed scenario with revenues falling 46% YoY while EBITDA margins sustained at 9.8%. Company resumed operations in almost all project sites with operational capacity of 50-60% pre-covid levels and expects labour force to bounce-back to 80-90% by end of Sep'20 with a strong execution momentum from H2FY21E. Company’s working capital levels have been sustained on the back of a) timely disbursements from State & Central govt authorities (except AP govt), b) availing Covid loan of Rs1.5bn at lower interest rate c) release of Bank Guarantees of Rs1.6bn d) receipt of Income Tax refunds of Rs1.2bn. We believe that with vast experience and proven execution capabilities, the company can leverage rising opportunities in buildings, transportation, metros, defense and airports once scenario normalizes and awarding momentum returns.

Outlook

We expect revenue/PAT to grow by 12%/10% over FY20- 23E. At CMP, the stock trades at a P/E of 6.7x/4.1x on FY21E/FY22E EPS and is trading at an EV of 3.9x/3x FY21E/FY22E EBITDA. We maintain BUY rating on the stock with a TP of Rs83.

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