January 2024

SINCE 1986

BSE Code : 500294

The Trick Is To Time Duration : 1 year

Spot Them At The CMP : `194.65 (as on 25 January, 2025)

Larval Stage Target Price : `253.05

NCC Limited
Your Perfect Portfolio Builder
Company profile
NCC Limited (NCC) is one of the largest well-diversified construc-
tion companies in India with a strong foothold in every segment
of the construction sector. It has a presence across varied verti-
cals of infrastructure space and undertakes civil construction for
buildings & housing, roads, water & environment, mining, elec-
trical, and power among others. It also has exposure to the real
estate development space and owns land banks in various cities
in South India.
the skill sets and capabilities to cater needs of diverse segments,
diverse geographies, and diverse clients. The company has a
presence in multiple growth segments - buildings & housing,
roads, water &
environment, irrigation, electrical, metals, mining, and railways.
A diversified presence gives the company multiple growth levers
and makes it better positioned to offset the impact of the slow-
down in any particular segment. It has a pan-India presence in-
cluding key states like

NCC, through its subsidiary, NCC Urban takes up urban infra- Maharashtra, Andhra Pradesh, Telangana, Karnataka, Gujarat,
structure projects such as the development of residential & UP, West Bengal, and Tamil Nadu with regional offices in 13
commercial complexes, serviced apartments, SEZs, integrated cities. NCC has been a preferred vendor for marquee clients in
townships, and complexes with advanced building techniques. building segments such as UP Housing Development Board, AAI,
The company also undertakes the development of infrastructure AIIMS, NBCC, BMRCL and
projects through Government concessions (road and energy MMRDA. Most of the orders are from the central government/
projects); which are long-term infrastructure projects that offer state government and central government-sponsored schemes.
a stable revenue stream. The company has also created a niche
in the infrastructure markets of the GCC through its subsidiaries Industry Outlook
with a key focus on roads, building, and water networks. The infrastructure sector is important for India’s economy. The
government is investing heavily in infrastructure, including roads,
NCC Limited’s product and geographical dis- highways, and other transportation projects. This investment is
tribution: expected to boost economic growth and create jobs. In the 2023-
This company’s revenue landscape paints a clear picture of fo- 2024 budget, the government has increased investment in infra-
cus and specialization. Nearly half, 48 per cent, comes from the structure by 33 per cent. This means that the government will
bedrock of construction. Projects in this sector form the solid spend Rs 10 lakh crore (USD 122 billion) on infrastructure proj-
foundation of their business. Following construction, water and ects. Furthermore, in the upcoming interim budget, the govern-
wastewater treatment contributes a solid 21 per cent. ment is expected to increase its spending on the infrastructure
sector by 10-15 per cent. This investment will help to improve
The remaining segments present a diversified portfolio. Mining
connectivity across the country and boost economic activity.
chips in at 10 per cent, followed by electrical at 8 per cent and
roads & bridges at 6 per cent. These sectors showcase the com- Additionally, the National Infrastructure Pipeline (NIP) was ex-
pany’s ability to navigate different areas within infrastructure panded to include 9,335 projects, further boosting the sector’s
development. Rounding out the mix are niches like NCC urban growth. India has witnessed extensive road and highway devel-
(3 per cent), irrigation (3 per cent), and a small 1 per cent from opment initiatives. The Ministry of Road Transport and Highways
others. While smaller, these segments demonstrate the compa- has inaugurated and laid the foundation stone for various na-
ny’s willingness to explore and potentially expand in the future. tional highway projects across the country. These projects in-
This balanced approach positions them for sustained growth and clude the construction of elevated structures, flyovers, and the
adaptability in the dynamic world of infrastructure development. development of new highways, resulting in improved connectiv-
ity and facilitating economic growth in different regions. As per
NCC is one the few players in the construction industry that has
Invest India, the market for roads and highways in India is pro-
Continued On PG 2...
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Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR service@dsij.in
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034
CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)
 January 2024
SINCE 1986

jected to grow at a CAGR of 36.16 per cent between 2016 -2025.
This is because the government is committed to improving the
country’s transportation system.
Growth Opportunities
n The company has recently secured four major orders, in-
cluding a tunnelling project and three electrical smart meter
projects, totalling Rs 11,293 crore.
n The company is also exploring new verticals for growth,
such as tunnelling projects and advanced metering systems.
n The company’s management expects strong performance in
the second half of FY2024.
n The company has a healthy pipeline of projects in various
sectors, including buildings and housing, transportation,
and water supply.
n The company’s management maintains the revenue guid-
ance at 20 per cent for FY24 and the company is confident
enough to achieve the 20 per cent guidance.
Q2FY24 Performance:
In Q2FY24, the company posted 39.91 per cent growth in its con-
solidated revenue at Rs 4,719.61 crore compared to Rs 3,373.43
crore from the previous year’s corresponding quarter. The com-
pany’s PBIDT (Excl OI) stood at Rs 303.74 crore, which decreased
by 2.05 per cent. The company also maintained a PBIDTM%
(Excl OI) of 6.44 per cent in Q2FY24. The Profit After Tax (PAT)
witnessed a significant decline of 85.04 per cent on a YoY ba-
sis which stood at Rs 136.67 crore. In summary, the company
demonstrated strong YoY growth in revenue, while the PAT de-
clined significantly.
Ratio
n Dividend yield – 1.08 per cent
n ROCE – 18.7 per cent
n ROE- 9.99 per cent
n Face Value- Rs 2
n PE- 20.1x
n Debt to Equity – 0.23
n Promoter Holding – 22.00 per cent
The Trick Is To
Spot Them At The
Larval Stage
Outlook and Valuation
The shares of the company are currently trading at a TTM PE of
20.3x, which looks attractive if we compare it with the industry
PE of 26.9x. The price-to-book value of the company is 2.0x, with
the industry price-to-book value being 2.79x. The company is
focusing on reducing its debt. The PEG ratio of the company is
0.85 which also looks attractive.
The company has a well-diversified order book, robust execu-
tion capabilities, a strong focus on debt reduction, and improve-
ment in working capital. Segment diversity across building, min-
ing, railways, electrical, water & environment is one of the key
differentiators at NCC.
The company’s vast experience and proven execution capabili-
ties can help leverage rising opportunities in the buildings, wa-
ter infra, transportation, metros, defence, and airports as the
awarding momentum pickup. In the last Budget, the FM shifted
the gear to capex
front with a major thrust on National Infrastructure Pipeline
(NIP) targets and various infra-related schemes.
The company’s order book has remained resilient, providing
revenue visibility for 2-3 years. NCC has a robust order backlog
of Rs 61,796 crore which is the highest ever in its history, provid-
ing strong revenue visibility over the next couple of years.
The management has maintained a 20 per cent revenue growth
guidance for FY24 and aims to achieve over 15 per cent revenue
growth in the long run. Softening of raw materials is likely to im-
prove margins going ahead. The company expects a 20bps im-
provement in EBITDA margin and a 50bps improvement in net
profit margin in FY24. The company has also maintained high
return ratios like ROCE and ROE.
We advise our subscribers to approach investments with cau-
tion and consider a staggered approach based on their risk ap-
petite, especially considering the stock market’s current volatil-
ity. Given the potential for heightened volatility, investors may
utilize dips in share prices as opportunities to strategically en-
hance their positions. Keeping all the growth factors about the
company we recommend a BUY with a target price of Rs 253.05.

Inc/Exp Statement (Consolidated) (Rs. in Crores )

Description 03/23 03/22 03/21 03/20 03/19
Net Sales 13351.32 9930.03 7256.02 8218.80 12079.76
Total Income 13503.57 10038.24 7371.62 8370.07 12198.01
Total Expenditure 12008.80 8933.92 6400.65 7188.65 10656.76
PBIDT 1494.77 1104.32 970.97 1181.42 1541.25
PAT 569.21 490.12 261.49 382.04 563.91
Dividend % 110.00 100.00 40.00 10.00 75.00
Adj. EPS(Rs) 9.07 8.04 4.29 6.26 9.39

Continued On PG 3...
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR service@dsij.in
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034
CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)
 January 2024
SINCE 1986

The Trick Is To
Spot Them At The
Larval Stage
Quarter On Quarter (Consolidated) (Rs. in Crores)
Particulars Sept - 23 June - 23 Q on Q Var % Sept - 22 Y on Y Var %
Net Sales 4283.22 3838.25 11.59 3003.71 42.60
Total Expenditure 4004.70 3457.66 15.82 2715.08 47.50
PBIDT (Excl OI) 278.52 380.59 -26.82 288.63 -3.50
PAT 69.04 162.26 -57.45 121.63 -43.24
PBIDTM% (Excl OI) 6.50 9.92 -34.48 9.61 -32.36
PBIDTM% 7.17 10.64 -32.61 10.70 -32.99
PATM% 1.61 4.23 -61.94 4.05 -60.25
Adj. EPS(Rs) 1.10 2.58 -57.36 1.94 -43.30

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Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR service@dsij.in
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034

CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)
 January 2024
SINCE 1986

The Trick Is To
Spot Them At The
Larval Stage
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shares of the said company

Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR service@dsij.in
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034

CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)
 January 2024
SINCE 1986

The Trick Is To
Spot Them At The
Larval Stage

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Disclosure: Kindly refer to the detailed disclosures as per SEBI (Investment Advisers) Regulations, 2013.
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Research Analyst
DSIJ PRIVATE LIMITED, Research Analyst, regulated by the Securities and Exchange Board of India, Research
Analyst # INH000006396.
Disclaimer: The recommendations are purely a view point and there is no guarantee on the returns.
Hence all the clients (paid or unpaid) are requested to apply their prudence before acting on any of the
recommendations. Neither DSIJ PVT LTD nor any of its promoters, members, or employees shall be held
responsible for any losses incurred (if any) by acting on the recommendations.
Disclosure: Kindly refer to the detailed disclosures as per SEBI (Research Analyst) Regulations, 2014.
Placed at https://www.dsij.in/disclaimer
Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way
guarantee performance of the intermediary or provide any assurance of returns to investors.
Disclaimer : https://www.dsij.in/disclaimer

Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR service@dsij.in
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034

CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)