NCC hits 52-week high, ICICI Securities sees 22% upside in stock

According to ICICI Securities, NCC stock could rally up to Rs 170, which implies a 22 percent gain and is likely to witness strong growth going ahead considering its strong order book visibility, and improving balance sheet strength

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Shares of NCC surged 6 percent intra-day on July 14 and hit a 52-week high at Rs 138.95, with ICICI Securities expecting the stock to rally up to Rs 170 – which means a 22 percent gain from the current high of Rs 138.95.

The stock has gained 28 percent in the past three months and is up 64 percent in a year. The underlying optimism is that NCC is a key beneficiary of the tailwinds in the buildings, roads, water, mining and electrical segments.

ICICI Securities also believes the company is likely to witness strong growth going ahead considering the strong order book visibility, and improving balance sheet strength.

At 11:38 am, shares of the company were trading 4.3 percent higher at Rs 137 on the BSE.

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Order book

The company has a robust order book of Rs 50,244 crore, which is 3.8 times the trailing twelve-month bill ratio. In FY23, they secured orders worth Rs 25,895 crore, and in Q1FY24, they received orders worth Rs 7,587 crore.

Looking ahead, ICICI Securities expects a similar order inflow of around Rs 26,000 crore during FY24, driven by the company’s focus on affordable housing, water projects (especially the Jal Jeevan mission), electricals (RTSS scheme), and tunnelling.

Easing input costs and debt reduction

Besides, with the easing of raw materials, NCC’s margins are likely to improve ahead. “We note that company expects EBITDA (Earnings Before Interest Tax Depreciation and Amortisation) and PAT (Profit After Tax) margins to improve by 50 bps, with bottomline growth expectations of around 40 percent in FY24,” the brokerage firm said.

As of the end of FY23, NCC’s standalone gross debt amounted to Rs 980 crore, down from Rs 1,184 crore in FY22. The company anticipates a decrease in gross debt of approximately 100-200 crore in FY24, supported by improved profitability and enhanced collections. This also seems to be another positive trigger for buying in the stock.

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