Hold NBCC; target of Rs 195: Reliance Securities

Reliance Securities' research report on NBCC

NBCC’s reported 4QFY17 performance has topped our estimates mainly on account of a substantial improvement in operating performance. Top-line grew by 5% YoY to Rs 23.4bn aided by 114% YoY improvement in real estate revenue. While PMC revenue improved by 6% YoY to Rs 20.7bn (89% of total revenue), EPC revenue contracted by 26% YoY to Rs 1.6bn.

Outlook

It bagged orders worth Rs 320bn in FY17 and expects to secure new projects worth Rs 250bn in FY18. Upwardly revising our earnings estimates by 15% each for FY18E and FY19E to factor in a substantial spike in margins, we reiterate our HOLD recommendation on the stock with a revised Target Price of Rs 195 (from Rs 170 earlier).