Despite strong order book, muted profitability a major concern for NBCC

The declining margin trajectory of the firm is one reason for caution

The 29-per-cent revenue growth by NBCC during the December quarter has not impressed the Street, given the stock continues to trade near its 52-week lows. Revenue growth in the quarter was led by its largest project management and consultancy (PMC) services segment, which reported a strong growth of 33.5 per cent. However, operating performance disappointed. 

Margins for PMC segments continue to be impacted by the Ind-AS 115 accounting change. Fees pertaining to design and preparatory work for PMC projects are accounted for during the execution of projects, and not upfront, as was case earlier. Its subsidiaries further pulled down operating profits,