NCC: Extremely undervalued

I noticed that KNR constructions also does lot of govt projects. But they have net profit margins of 10%. The same is good for GR Infra as well. Is there anything they do which NCC doesn’t that causes difference in margins?

NCC Ltd wins 5 new orders worth ₹1,898 crore. Out of these, three orders of Rs. 988 crore pertain to Building Division and balance two orders of Rs.910 crore pertain to Water
Division.

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The total debt for NCC is around 2000 Crores. But yearly interest payment is closed 480 Crores. Can anyone explain why it’s so high? Is it something to do with LC/BG, short term working capital etc? Appreciate any detailed explanation of these numbers. Thank you

The company will sell its entire stake in NCC Vizag Urban Infrastructure to GRPL Housing for Rs 199.5 crore. Good positive for the stock. Orderbook remains strong at 4.3x book-to-sales, providing high revenue visibility. It is almost certain that FY23 will be the year of peak awards (for FY19-24 cycle) and FY24, being an election year, will see a sharp drop (unless this historically recurring trend breaks) @sahil_vi curious to know your take on valuation, EV/EBITDA valuation of 4.3 (FY23E) tells me this is a good sell above 110

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Good topline growth in Q4. Good dividend of Rs. 2.

Margins quite low at 7.85%. Order inflow not so great.

Stock trading below book value (if my beginner level calculations are correct). Not sure what can be the trigger for price upmove.

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In the con-call, the management mentioned that they have a price escalation clause in the contracts. But it doesn’t look like they are able to execute it as the EBITDA margins have fallen considerably even QoQ. Does anyone have an idea about this?

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