NCC soars 10% on order win worth Rs 3,601 crore in December

A major portion of the orders are from the central government/ state government and central government sponsored schemes, where the counterparty credit risk is minimal

Shares of NCC moved higher by 10 per cent to Rs 92.45 on the BSE in Monday’s intra-day trade amid heavy volumes after the company received 5 new orders aggregating to Rs 3,601 crore in the month of December,2022.

Average trading volumes on the counter jumped more than two-fold with a combined 21.17 million equity shares having changed hands on the NSE and BSE till 12:00 PM. The stock hit a 52-week high of Rs 96.90 on December 14, 2022. In comparison, the S&P BSE Sensex was up 0.38 per cent at 61,069.

"Out of these orders, 2 orders valuing Rs 87l crore relate to Water division, 2 orders valuing Rs 993 crore relate to Electrical division and one order valuing Rs 738 crore relates lo irrigation division. These orders were received from State Government agencies and do not include any internal orders," NCC said.

Meanwhile, in the past three months, the market price of NCC has appreciated by 30 per cent, as compared to 6 per cent rise in the S&P BSE Sensex.

NCC is a Hyderabad-based construction company engaged in the construction of roads, buildings, irrigation, water and environment, electrical, metals, mining and railways. Apart from executing projects across India, the company has a presence in the Middle East through its subsidiaries in Muscat and Dubai.

On December 12, 2022, India Ratings and Research (Ind-Ra) had upgraded NCC’s long-term issuer rating to ‘IND A+’ from ‘IND A’ with stable outlook.

The upgrade, it said, reflected NCC’s demonstrated ability, over the 20 months ended September 2022, to replenish the cancelled and slow-moving orders from Andhra Pradesh (AP) with orders coming majorly from the government of India (GoI) owned counterparties and improved geographical diversification.

"The upgrade also reflects Ind-Ra's expectation that NCC’s interest coverage (operating EBITDA/finance cost) will remain above 2.5x in FY23 and FY24, if the improvement in EBITDA and gross working capital cycle demonstrated in its H1FY23 results continues," Ind-Ra said in rating rationale.

The company's order book is concentrated towards buildings (64 per cent) such as commercial, residential and industrial buildings and water, irrigation and railways related works (20 per cent), with the balance comprising roads, electrical and mining projects.

NCC has also executed engineering procurement & construction works towards metros, railways and other power sector-related activities. Furthermore, Ind-Ra draws comfort from the fact that a major portion of the orders being are from the central government/ state government and central government sponsored schemes, where the counterparty credit risk is minimal.