NCC reported a decent set of Q2FY21 numbers. Topline declined 11% YoY to Rs. 1,541 crore, largely impacted by slower execution amid disruptions caused by Covid-19 pandemic and heavy monsoon. However, various cost measures initiatives drove operating margin performance (to 13.6%, up 16 bps YoY, 381 bps QoQ. Reported PAT of Rs. 58.4 crore (down 27% YoY) was better than our estimate led by operating profit beat. We highlight that NCC had booked Rs. 44.2 crore in 'other income' as profit against sale of land, and made provisions worth Rs. 16.5 crore for impairment of investment in Q2FY20. Adjusted for the same, PAT decline was merely 5% YoY.
Valuation & Outlook
Labour migration and supply chain disruption has largely impacted NCC's performance during H1FY21. Going ahead, we expect a gradual recovery from H2FY21 with key solace being controlled debt levels. We note that NCC is currently trading at 6.2x FY22E P/E. However, we would turn constructive only when we witness an improvement in working capital. We assign HOLD recommendation with a target price of Rs. 40share (4x FY22E EV/EBITDA).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_NCC_Q2FY21.pdf
Shares of NCC Limited was last trading in BSE at Rs.38.95 as compared to the previous close of Rs. 38.9. The total number of shares traded during the day was 252718 in over 1303 trades.
The stock hit an intraday high of Rs. 39.55 and intraday low of 38.65. The net turnover during the day was Rs. 9873286.