Hold NCC; target of Rs 35: ICICI Direct

ICICI Direct's research report on NCC

NCC’s topline came in at Rs 1179 crore, down 46% YoY (albeit better than estimated 51% decline), impacted by slower execution amid the lockdown led restrictions and labour unavailability due to Covid-19. The consequent margin, at 9.8% (down 240 bps YoY), was driven by cost rationalisation in employee and admin costs. PAT came in at Rs 16.9 crore, aided by higher other income and tax credit of Rs 32 crore for FY19 tax assessment.

Outlook

We note that NCC is currently trading at attractive 6.4x FY22E P/E. However, we would turn constructive only when we see an improvement in execution. We maintain HOLD rating with a revised TP of Rs 35/share (4x FY22E EV/EBITDA).

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