Scripscan:NCC Ltd
cmp:37
Code:500294
Story:NCC Limited operates as a construction company in India. The company’s Buildings and Housing division constructs industrial and commercial buildings, housing projects, IT parks, shopping malls, sports complexes, stadiums, and hospitals. Its Transportation division builds and executes projects, such as highways; bridges comprising flyovers and elevated corridors; airport terminals; and ports for government and private agencies. The company’s Electrical division designs, engineers, supplies, erects, and tests and commissions EHV transmission lines, sub-stations and lines, and distribution systems. Its Water and Environment division undertakes water supply projects, water treatment plants, underground drainage works, and sewerage treatment projects. The company’s Irrigation division constructs dams, lift irrigation projects, gravity irrigation projects, and hydro electric power plants. Its International division handles roads and highways, water supply and sewerage network, oil and gas, and real estate projects in the Sultanate of Oman and the United Arab Emirates. The company’s Power division develops under ground tunnels, and under ground and open power house projects. It also offers planning, engineering, and designing services, as well as civil work services related to thermal and hydro power projects.The current outstanding order book of NCC stands at Rs 16,570cr (3.3x FY2011 revenue), with order inflow of Rs 1,746cr for 2QFY2012. Going ahead,I believe the NCC’s order inflow would be driven by EPC work of its own power plant. However, earnings would continue to reel under pressure due to a soaring interest costs owing to high interest rate regime and increased debt levels – to fund its investments in the captive projects (read power project/road BOT project) and working capital requirements. At the current price, the stock is trading at attractive valuations (4x its FY2013E earnings adjusted for its investments and subsidiaries) and at 0.5x FY2013E on P/BV basis (standalone).Buy it with a target of 50 bucks to be achieved in the next three quarters.
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