Rakesh Jhunjhunwala portfolio stock NCC has fallen 10% so far in 2022. However, brokerages remain bullish and see up to 70% potential rally going forward, given that the company secured Rs 4,300 crore worth of orders in Q4FY22, taking the OB to Rs 39,300 crore. It further expects Rs 15,000 crore of order inflows in FY23. “We remain positive on the NCC story, of strong earnings growth, driven by its strong balance sheet, diversified orderbook and presence across segments. The stock appears highly attractive, trading at 7x FY23 PE,” said Philip Capital in its report. NCC shares rose 3.6% to an intraday high of Rs 64.65 on BSE.
Dividend paying Rakesh Jhunjhunwala stock
NCC has announced Rs 2 dividend per share on the equity share of face value of Rs 2 each, for the Financial Year 2021-22. According to the NCC shareholding pattern for January to March 2022 quarter, Rakesh Jhunjhunwala holding in NCC stands at 6,67,33,266 shares or 10.94 per cent stake in the company.
Stock talk: Should you buy NCC shares?
Philip Capital: Buy
Target price: Rs 105, Upside: 67%
NCC delivered mixed Q4 performance – strong execution but weak margins. Topline grew over 20% on-year, while Margins dropped 230bps qoq to 8.5%. According to analysts at Philip Capital, Margin fall, on account of higher input costs, was much sharper than anticipated. However, the management expects the margins to be back to 10% levels in next quarter. Orderbook remains strong at 4x book-to-sales, providing high revenue visibility. The biggest positive however, was Rs 600 crore reduction in debt – taking the standalone debt to Rs 1200 crore. “Overall, the temporary weakness in margins is more than compensated by the debt reduction, which is more permanent in nature,” investment and wealth management firm said in its report. It maintained ‘buy’ call on the stock with a target price of Rs 105, implying 67% upside.
HDFC Securities: Buy
Target price: Rs 108, Upside: 71%
HDFC Securities also has a ‘buy’ call on NCC with a target price of Rs 108, implying 71% potential rally going forward. Time period given by the analyst is one year for when NCC share price can reach the defined target. Strong order inflows are expected in Q1FY23, with a major sewage treatment plant order in Mumbai. NCC expects revenue growth of 10-15% in FY23, with an EBITDA margin of around 10%, the brokerage said. “We maintain BUY with a reduced TP of INR 108 (9x Mar-24E), given high commodity inflation and resultant impact on margins,” it added.
ICICI Direct: Hold
Target price: Rs 70, Upside: 13%
NCC’s share price has de-grown by 35% over the past five years (from Rs 95 in May 2017 to Rs 62 levels in May 2022). “Sharp debt reduction has been key positive. However, margins may be see volatility in FY23,” the brokerage said. The brokerage believes that NCC is firmly placed to capitalise on huge infrastructure pipeline. Continued momentum in awarding activities is likely to translate into healthy order inflows. It expects 10.3% revenue CAGR over FY22-24E with margins at 10%. The brokerage revised rating to ‘hold’ from ‘buy’ assigned earlier.
Anand Rathi: Buy
Target price: Rs 95; Upside: 50%
Anand Rathi believes that NCC share price is now out of consolidation phase and it is well poised to move up to Rs 95 apiece. Highlighting the fundamentals that may fuel NCC share price rally going forward, Anand Rathi said in its report “Strong positive CFO-led marked reduction in gross and net debt was the key notable from NCC’s Q4 and FY22 performances. Execution abilities too were at the fore.These two render growth prospects bright. Order additions and operating profitability were the two deliverables we were left desiring better. Nevertheless, NCC’s full-year additions were still good to replenish FY22 revenues. Input price pressure is real, but the gradual waning of the impact is not ruled out.” On the benign valuation and healthy prospects, the brokerage retained Buy rating on the stock. However, it lowered the target price to Rs 95 from Rs 105 earlier, on input price pressure.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)