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Reliance Securities
NCC (Buy)
CMP: ₹107.55
Target: ₹165
NCC’s order book as on December 31, 2018 stood at ₹34,200 crore (3.1x of TTM revenue), which provides a healthy revenue visibility. Further, it has secured orders worth over ₹12,500 crore in 4QFY19 surpassing its earlier guidance of ₹14,000 crore inflow in FY19E with a wide margin.
The management expects to surpass its earlier revenue growth guidance of about 45 per cent y-o-y for FY19E (₹11,000 crore) on the back of robust order inflow and higher proportion of fast-track projects.
As working capital cycle remained broadly flat on q-o-q basis, surge in gross debt could be a near-term overhang for the stock.
Looking ahead, we expect NCC’s revenue and earnings to clock 28 per cent and 27 per cent CAGR, respectively over FY18-FY21E on the back of robust inflow and higher proportion of fast tract projects.
We maintain our fundamental ‘buy’ recommendation on the stock with a SOTP-based target price of ₹165.
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