NCC - At All-Time High Order Book: Geojit

Geojit Research Report

NCC Ltd. is one of the largest, well diversified construction companies in India, with a foothold in every segment of the construction sector.

• NCC reported a top-line growth of 30% YoY, backed by its strong execution in Jal Jeevan Mission projects (30% of revenue).

• Ebitda margin improved by 41 basis points YoY to 9.9% in Q1 FY24, principally due to higher execution and moderation in input prices. NCC expects margins to improve to 10% in FY24, led by a better gross margin.

• In Q1 FY24, order inflows increased by 83% YoY, taking the total order book to an all time high of Rs 54,110 crore (3.8 times trailing twelve months revenue), providing strong revenue visibility in the coming years.

• With a strong order book, the company has guided for revenue growth of 20%/15% for FY24/FY25, respectively.

• With a pick-up in execution and benign input prices, we increase the FY24/FY25 earnings estimates by 5%/10%, respectively.

• We reiterate 'Buy' rating on NCC and value the stock at a price/earning of 11.5 times on FY25E earnings per share with a target price of Rs 184.

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