Hold NBCC; target of Rs 40: ICICI Direct

ICICI Direct's research report on NBCC

NBCC’s consolidated topline grew 2.0% YoY to Rs 1,891.1 crore, lower than our estimate of Rs 2,544.1 crore. EBITDA margins contracted 220 bps YoY to 1.4% in Q1FY20 due to a sharp contraction in real estate margins. PAT de-grew 33.2% YoY to Rs 48.9 crore mainly on account of lower topline growth and sharp EBITDA margin contraction.

Outlook

Hence, we downgrade the stock to HOLD despite the attractive valuation (14x FY21E EPS) with a target price of Rs 40/share (16x FY21E EPS).