NCC Q2 Results Review - Rocking Performance; Ordering Could Again Surprise: IDBI Capital

IDBI Capital Report

NCC Ltd., Q2 FY24 adjusted Ebitda came ~40% higher and adjusted profit after tax came 60% higher than our estimate. Beat is led by better execution and margin uptick. Reported number were impacted from one offs and adjusted Ebitda margin stood at 10.7% in Q2 FY24.

NCC H1 FY24 earning per share forms 51% of FY24E earning per share and there is upside risk to our estimate post Q2 FY24 result.

However, we maintain our estimate and unchanged target price of Rs 185 retain 'Buy' rating. We value NCC at its historical average price-to-earnings ratio of 12 times. In bull case, valued at 15 times we see target price of Rs 232.

Up cycle in NCC ordering has continued in FY24E and it has achieved 77% of its FY24 guidance and is driven by building and electrical segment. Stock at price-to-earnings ratio of 10 times FY25E EPS, continue to trade at 20-25% discount to it’s infra peers.

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