NCC gains 3% on winning orders worth Rs 2,088 crore in May 2023

Thus far in the calendar year 2023, the stock has surged 36 per cent, as compared to 2.1 per cent rise in the S&P BSE Sensex.

Shares of NCC were up 3 per cent at Rs 126.45 on the BSE in Friday’s intra-day trade after the company said it received new orders aggregating Rs 2,088 crore (excluding GST) in the month of May 2023.

The stock of civil construction company had hit a 52-week high of Rs 126.85 on May 3, 2023. Thus far in the calendar year 2023, it has surged 36 per cent, as compared to 2.1 per cent rise in the S&P BSE Sensex.

Out of total Rs 2,088 crore orders, the company’s Building Division has signed the agreements for orders amounting Rs 1,668 crore and Water Division order worth Rs 420 crore, NCC said in an exchange filing. These orders are received from State Government Agencies and does not include any internal orders, the company said.

NCC had also received 6 new orders aggregating to Rs 3,344 crore (excluding GST) earlier in the month of April 2023. At the end of financial year 2023 (FY23), NCC’s order book stood at Rs 50,244 crore (3.8x order book to TTM bill ratio). The current order book provides strong visibility, which will drive around 18 per cent topline CAGR over FY23-25 along with margins improvement.

Meanwhile, in January-March quarter (Q4FY23), NCC’s earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 59 per cent to Rs 424 crore and EBIDTA margin increased from 8.52 per cent to 10.55 per cent, primarily lower input prices and receipt of Rs 41 crore claim from one of the BOT SPV.

The company guided for debt reduction by another Rs 200 crore by FY24-end and incurring a capex of Rs 280 crore. The order book for the AP project stands at Rs 3,130 crore. With the conclusion of the Sembcorp arbitration case, the company is expecting the pay out in H2FY24. It guided for FY24 revenue to grow by 20 per cent YoY with an EBITDA margin of 10-10.15 per cent and an order intake of Rs 26,000 crore, analysts at HDFC Securities said.

Given the robust order book, pick-up in execution, and robust balance sheet, the brokerage firm recalibrate their FY24/25E EPS by -3.6/4.9 per cent. They maintain BUY on NCC, with an increased target price of Rs 137 (9x Mar-25E EPS).