The stock of NCC was up a scorching 33 per cent last week. This was aided by favourable developments in the roads space. The Finance Ministry allowed road developers to defer payment of premiums to the Government. Also, reports of the NHAI setting the levels each player is qualified to bid for in 2014 surfaced last week.

Companies heavily into the roads space saw their stocks soar. Roads, buildings, and oil and gas projects make up more than a third of NCC’s order book. It already has five operational road projects. The company is selling stake in these projects as well as in its power project.

Still, the stock’s surge seems unjustified. Even if NCC gets new orders, executing them could be a challenge given its high debt. Crisil downgraded the company’s bank facilities and debt instruments to moderately risky with a negative outlook last week.

For the nine months to December 2013, the company’s consolidated net profit was almost wiped out compared to the year ago. This has resulted in the stock trading at a high price-earnings multiple of 69 times trailing 12-month earnings.

The stock saw unusually high volumes last week, with the average number of shares traded at around 817,000, a significant jump from the average of 180,000 shares in earlier weeks.

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