Shares of NCC Ltd. rose the most in a month after CLSA raised its price target on the builder of roads to power transmission lines.
The research firm raised its target to Rs 80 apiece from Rs 53, implying a potential upside of 40% from Friday's closing price of Rs 57.1.
“The company is getting ready to focus its competencies on the $493-billion opportunity in the building, road and water domains in the National Infrastructure Pipeline,” CLSA said in a note.
The research firm expects NCC's earnings per share to grow at an annualised rate of 41% on the back of robust order inflows, a good execution track record and reduced dependence on its home state. “It has also de-levered its balance sheet and is at a decade low leverage.”
The company had won 15 new orders in December worth Rs 8,980 crore, according to a Jan.1 exchange filing. That compares with the Rs 3,905-crore orders secured in November and Rs 1,414 crore in October.
CLSA raised its FY22-23 EPS estimates for NCC by 21-19% to factor in robust order wins. “We believe that the government's affordable housing and urban infrastructure programmes will create years of growth visibility for asset-light builders, such as NCC.”
Also, NCC's valuation at 7.5 times FY22 price-to-earnings, according to CLSA, is one of the reasons it recommends a ‘buy' on the stock.
Shares of NCC gained as much as 6.8% to Rs 61 apiece, snapping a two-session losing streak. Of the 17 analysts tracking the stock, 16 have a ‘buy' rating, while one suggests a ‘hold'. The average of Bloomberg consensus 12-month price targets implies an upside of 14.7%.
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