Geojit has given Buy recommendation for NCC with a target price of Rs. 89 in its research report issued on Sep 07, 2022
Geojit’s research report on NCC
NCC Limited (NCC) is one of the largest well diversified construction companies in India with a foothold in every segment of construction sector. NCC reported a robust revenue growth of 56% YoY in Q1FY23 backed by its strong order book and pick up in execution. However, EBITDA margin declined by 105bps YoY to 9.5% due to higher commodity prices and higher sub-contracting expenses (62% YoY). Order book remained healthy at Rs 40,616cr (3.7x TTM revenue), supported by a strong inflow of Rs 4,456r in Q1FY23. The management expects traction in order inflow with emphasis on affordable housing, Jal Jeevan Mission, roads, and railway, while it refrained from guidance. With a strong order book, the company has guided for revenue growth of 15% to 20% for FY23, with a 10% EBITDA margin.
Given strong order book, healthy balance sheet and pick up in execution, we maintain Buy rating and value at a P/E of 11x on FY23E EPS with a TP of Rs.89.