National Buildings Construction Corporation Ltd - 4QFY2016 Result Update - Angel Broking

National Building Construction Corporation (NBCC) reported a strong 38.8% yoy increase in revenue for 4QFY2016 to Rs. 2,251cr, which is above our estimate of Rs. 2,130cr. Revenue growth during the quarter was on account of 45.6% yoy increase in the PMC segment revenue to Rs. 2,068cr. The segment accounted for 92% of the company's 4QFY2016 revenues. Despite strong execution, NBCC however disappointed us on the margin front; the EBITDA margin for the quarter came in at 5.3%, lower by 324bps on a yoy basis. The miss in the operating performance percolated down to the PAT level. The PAT at Rs. 141cr is lower than our expectation of Rs. 186cr while the reported PAT margin declined 196bp yoy to 6.3% for 4QFY2016.

NBCC's order book stands at Rs. 37,000cr as of 4QFY2016, indicating an increase of over 100% on a yoy basis. The current order book to Last Twelve Month (LTM) sales ratio stands at 6.3x.

Outlook and valuation: Considering the reviving award activity environment, we expect NBCC to report ~Rs. 20,000cr of order inflows each year for FY2017-18E. Also, emerging opportunities in the redevelopment space, the government's initiative of developing 'Smart Cities' and the company's cash rich status should aid its growth. We expect the company to report 27.9% and 45.5% top-line and bottom-line CAGR during FY2016-18E, respectively. Given the bid pipeline and the company's huge order book, we are convinced about the company's earnings growth prospects over the next few years. Accordingly, we have assigned 20.0x P/E multiple to our FY2018E EPS of Rs. 55/share to arrive at a price target of Rs. 1,098. Given the 12% upside potential in the stock from the current level, we maintain our Accumulate rating on the stock.

Shares of NATIONAL BUILDINGS CONSTRUCTION CORPORATION LTD. was last trading in BSE at Rs.196.15 as compared to the previous close of Rs. 971.45. The total number of shares traded during the day was 237398 in over 4767 trades.

The stock hit an intraday high of Rs. 199.9 and intraday low of 193. The net turnover during the day was Rs. 46764978.

Source : Equity Bulls

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