Professional Documents
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NCC
Performance Highlights
Quarterly Highlights Standalone
Y/E March (` cr) Net sales Operating profit Net profit 4QFY13 1,741 157 27 4QFY12 1,755 102 11 3QFY13 1,184 86 11 % chg (yoy) (0.8) 53.9 151.9 % chg (qoq) 47.1 82.9 151.2
BUY
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Infrastructure 802 5,145 1.8 61/28 287,581 2 19,674 5,967 NGCN.BO NJCC@IN
`31 `42
12 Months
NCC posted poor set of numbers for 4QFY2013 which were below our and street expectations. The current outstanding order book of NCC stands at `18,553cr (3.2x trailing revenues) in 4QFY2013, indicating a decline of 8% yoy. During the year, the company secured orders worth `4,813cr (excluding slowing moving order worth `853cr in the power segment).
Deleveraging balance sheet through monetization of assets: On the top line front, NCC reported revenues of `1,741cr in 4QFY2013, indicating a decline of 0.8% yoy, which was lower than our estimate of `1,879cr respectively. This is mainly due to (a) slower-than-expected execution in some projects particularly in power segment (delay at clients side) and (b) depleting order book. On the EBITDAM front, owing to profit from sale of real estate asset, the companys EBITDA margins grew by 320bp yoy to 9.0% (our estimate was 8.5%) in 4QFY2013. Interest cost came in at `113cr a growth of 14.9% yoy. On the bottom line level, NCC reported a yoy growth of 151.9% to `27cr, lower than our and consensus estimate owing to lower-than-expected revenue performance and higher tax rate (45%). Outlook and valuation: During the quarter, NCC has reduced its debt by `297cr to `2,225cr as on 4QFY2013 and is in process of reducing its debt to below `2,000cr through stake sale in two of its road BOT projects (Western UP tollways and Bangalore Elavated expressway), continued monetization of its land bank and completion of stake sale in the Himachal Sorang project. The stock currently trades at a PE of 3.0x and 2.2x (excluding subsidiaries valuation) our FY2014 and FY2015 EPS estimates. Further, on account of the stake sale initiated by the company in some of its projects and decline in its stock price, we upgrade our recommendation on the stock to Buy with a target price of `42.
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 20.3 10.4 39.7 29.7
3m 0.2 (27.2)
FY2012 5,250 3.5 36.0 (78.0) 7.6 1.4 22.3 0.3 1.5 6.6 0.6 7.4 3.3 10,118 48.2
FY2013E 5,725 9.0 62.7 74.2 8.2 2.4 12.8 0.3 2.6 8.2 0.5 5.9 2.5 4,813 (52.4)
FY2014E 6,167 7.7 68.6 9.4 8.0 2.7 11.7 0.3 2.7 8.4 0.5 6.0 3.0 9,918 106.1
FY2015E 6,945 12.6 93.3 36.1 8.2 3.6 8.6 0.3 3.6 9.2 0.5 5.5 3.2 11,902 20.0
Viral Shah
022-39357800 Ext: 6842 viralk.shah@angelbroking.com
4QFY12 1755 1653 102 5.8 98.4 21.7 33.6 0 15 4.7 11 0.6 0.4
% Chg (yoy) (0.8) (4.1) 53.9 320bp 14.9 5.8 (14.1) 0 221.1 380.3 151.9 95bp -
% Chg (qoq) 47.1 44.3 82.9 177bp 14.3 (2.1) (40.4) 0 320.4 2145.8 151.2 65bp 151.2
FY2013 5725 5254 471 8.2 407 92 126 0 98 35.1 63 1.1 2.4
FY2012 5250 4851 399 7.6 384 83 121 0 53 16.9 36 0.7 1.4
% Chg 9.0 8.3 18.0 62bp 6.0 10.9 4.4 85.5 107.0 75.4 41bp 75.4
27.3
24.8
26.8
18.5
30.0 25.0 20.0 15.0 10.0 5.0 0.0 (5.0) (10.0) (15.0) (20.0)
18,799
16,570
21,990
20,196
20,520
19,639
5,000 -
(14.5)
2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 Order Booking (` cr, LHS) Growth (yoy %, RHS)
Projects update
Pondicherry-Tindivanam: Toll collection for the project decline by 12.5% qoq to `3.5lakhs/day, much lower than the breakeven level of `7-8lakhs/day. However, the company believes that toll revenue will pick up going ahead.
Western UP: Due to mining ban in the state imposed by the government, toll collection is currently at `18-20lakh/day. Going ahead, with lifting of the mining ban, the Management expects toll collection to increase to `24lakh/day.
Bangalore Elevated Toll Way (BETL): During the quarter, the toll collection has increased to `25lakh/day against `20-22lakh/day in 3QFY2013. Himachal Sorang: As per the Management, the company is in an advanced stage of negotiation with some investors for part/full stake sale in the Himachal Sorang project. The Management expects the deal to be completed within a period of 910 months. Further, the company is also in talks with some regulatory authorities for signing short term power purchase agreement (PPA). Nelcast Power Project (1,320MW): The construction activity for the 1,320MW (660MW x 2) Krishnapatnam power project is going as per schedule and the company has already placed orders for BTG. However, the company has not signed any power purchase agreement (PPA) till date and is hopeful of tying up for one within the next few quarters. The company has participated in case- I bidding in UP and also would participate for case- I in Tamil Nadu and Karnataka.
18,553
25
20 15 10 5 0 (5) (10) (15) 1.0
0.6
0.6
40
103 20 0
157
102
117
112
86
6.1
6.0 5.0
2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 EBITDA (` cr, LHS) EBITDAM (%, RHS)
2%
10%
31%
Buildings, Roads & Oil & Gas Water, Env. & Railways Irrigation Electricals Power
Mining Metals
5% 9%
Source: Company, Angel Research
16%
International
Change in estimates
Due to slower execution and depleting order book in FY2013, we have revised our estimate for FY2014 and also introduced our FY2015 estimate.
Exhibit 8: Change in estimates to factor in lower top-line growth and higher interest cost
Earlier estimates Revenue EBITDA margin (%) PAT
Source: Company, Angel Research
13,358 14,850 15,631 60,873 68,946 78,040 5,725 1,565 6,026 2,180 1,853 6,167 2,511 6,824 2,455 1,928 6,945 2,736 7,563 2,734 2,234 11,717 12,954 14,740
Company background
NCC, having started off as a building/industrial construction company, has emerged as an EPC contractor with a diversified product portfolio. NCCs presence across all the key infrastructure verticals: 1) roads; 2) buildings; 3) water; 4) irrigation; 5) electrical; 6) power; 7) oil and gas; and 8) metals endows it with a relatively de-risked business model. NCC has also ventured in international geographies such as Oman and UAE, which further diversifies its business.
Key ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) Wcap cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage 0.6 2.8 2.2 1.0 4.9 1.6 0.9 5.4 0.8 0.8 4.2 0.9 0.9 4.4 0.9 0.9 4.1 1.0 6.9 57 89 141 139 6.0 59 99 145 177 5.4 74 96 200 190 5.4 85 78 248 162 5.2 88 70 231 153 5.1 85 67 219 146 12.8 13.6 9.3 9.6 10.1 7.1 6.6 6.8 1.5 8.2 8.4 2.6 8.4 8.6 2.7 9.2 9.4 3.6 9.0 65.9 1.5 8.9 9.3 0.6 8.6 8.2 61.5 1.2 6.1 7.9 0.8 4.7 6.0 68.0 1.1 4.6 11.1 0.9 (1.5) 6.7 64.1 1.2 5.4 12.2 0.9 (0.4) 6.4 66.0 1.3 5.6 12.9 0.8 (0.5) 6.5 66.0 1.4 6.2 13.0 0.9 0.1 9.5 9.5 10.0 1.3 87.5 6.4 6.4 9.0 1.0 92.7 1.4 1.4 4.6 0.3 94.0 2.4 2.4 6.0 0.3 96.2 2.7 2.7 6.6 0.3 98.5 3.6 3.6 8.2 0.3 101.8 3.3 3.1 0.4 4.2 0.4 4.4 0.6 4.9 3.5 0.3 3.2 0.6 6.5 0.6 22.3 6.7 0.3 1.0 0.6 7.4 0.6 12.8 5.2 0.3 1.0 0.5 5.9 0.6 11.7 4.7 0.3 1.0 0.5 6.0 0.6 8.6 3.8 0.3 1.0 0.5 5.5 0.6 FY2010 FY2011 FY2012E FY2013E FY2014E FY2015E
10
E-mail: research@angelbroking.com
Website: www.angelbroking.com
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This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.
Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered
NCC No No No No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.
Ratings (Returns):
11