Hold NBCC; target of Rs 35: ICICI Direct

ICICI Direct's research report on NBCC

NBCC witnessed a decent recovery in the overall performance in Q3FY21 YoY and QoQ but is still far away from its normalised show of FY17, FY18. During Q3FY21, consolidated revenue improved 9% YoY (to Rs 2,103.6 crore) largely driven by a pick-up in execution seen in PMC (up 10.7% YoY; contribution: 94.7%) and real estate divisions (revenue doubled; contribution: 1.5%). EBITDA margin was up 169 bps YoY at 3%. At the net level, healthy operating show coupled with lower tax outgo translated to doubling of PAT to Rs 94 crore.

Outlook

While NBCC’s order book position has remained strong, its revenue and margin performance was benign with challenges witnessed in big-ticket size redevelopment projects and margins declining in the PMC segment. While there are triggers such as a) expected surge in executable order book position, b) improvement in margins and c) with lean-balance sheet position, we will await execution and margin pick-up before turning constructive. We maintain HOLD rating with a TP of Rs 35/share (earlier Rs 37).

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