Result Update: NBCC (India) Ltd - ACCUMULATE - TP Rs.229 - Kotak

NBCC Q3FY18 results were below our estimates on weak execution across segments as its large size projects yet to pick up. The standalone net revenue for the quarter declined by 7% yoy to Rs 13 bn on below expected revenue across all segments. In addition, change in accounting policy resulted in exclusion of indirect taxes in Q3FY18 revenue which also affected its revenue growth. EBITDA for the quarter was Rs 687 mn, declined by 9% yoy with EBITDA margin remained flattish at 5.2% as against our estimates of 6.2%. The company has begun work on Rs 100 bn of new projects in past 6 months which will be completed in next two years. NBCC has a robust total order book of Rs 800 bn which gives strong revenue growth visibility for the next 5 years. Further, it has strong pipeline of new projects from development of railways land, armed forces land, Dharavi, etc. The company expects strong revenue growth in FY19E as most of the redevelopment projects would contribute meaningfully in the year. We have cut our earnings estimates for FY18E and FY19E factoring in weak execution in 9MFY18 and introduce FY20E estimates. The stock is presently trading at PE of 36.7x and 24.6x based on FY19E & FY20E EPS of Rs 5.6 and Rs 8.4 respectively. We recommend ACCUMULATE on the stock (Vs Sell) with revised target price of Rs 229 (Vs Rs 250 earlier).

Shares of NBCC (India) Ltd was last trading in BSE at Rs.203.9 as compared to the previous close of Rs. 208.15. The total number of shares traded during the day was 112524 in over 1349 trades.

The stock hit an intraday high of Rs. 209.5 and intraday low of 202.5. The net turnover during the day was Rs. 23146393.

Source : Equity Bulls

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